During the last few years it has been contended repeatedly that the α+α′ duplex structure of Alnico alloys is a consequence of spinodal decomposition. Electron micrographs have been made of numerous alloys of the pseudobinary Fe-NiAl system, after various isothermal heat treatments. The results strengthen the view that there exist two different mechanisms of decomposition for each Alni alloy: spinodal decomposition at a temperature remote from, and a conventional nucleation and growth transformation at a temperature adjacent to the solubility curve. The influence of the relative volume fraction of the α and α′ phases on the morphology of the microstructure and thus on the magnetic properties was also investigated. Due to a distinctly asymmetric form of the miscibility gap in the Fe-NiAl system, the relative amounts of α and α′ are very temperature dependent. It was found that as a consequence of this the microstructure of an Alni alloy arising from spinodal decomposition at a relatively high temperature during continuous cooling is considerably different from the microstructure arising from quenching followed by tempering. In alloys with an Fe content higher than approximately 45 at.%, optimum properties can be obtained by continuous cooling. On the contrary, in alloys with less than 45 at.% Fe optimum coercivity is achieved by quenching followed by tempering. A third aspect considered is the formation of an elongated precipitate in Alnico alloys by magnetic annealing. According to Cahn1 the presence of a magnetic field prevents the formation of the plane wave perpendicular to the field direction, thus resulting in the formation of elongated particles parallel to this direction from the initial stage of spinodal decomposition. It was shown for Ticonal X that perpendicular waves are present even during the early stages of decomposition. It was further shown that the Ni-Al phase perpendicular to the field direction diminishes with increasing annealing time; in other words, elongated Fe-Co particles develop during the isothermal annealing. It can therefore be stated that it is very probable that during the isothermal heat treatment of Ticonal X the magnetic field does not have the influence attributed to it by Cahn. Some information about the mechanism by which elongated particles are formed was gained from the electron micrographs. Many imperfections are visible disturbing the periodicity of the microstructure. The imperfections give a visual impression of dislocation lines. The assumption of Cahn that the increase of the interphase spacing in periodic microstructures might be attributed to the ``climb'' of this sort of ``dislocation'' thus becomes more admissible. In this mechanism the increase of interphase distance (increase of wavelength) and the elongation of the Fe-Co phase parallel to a 〈100〉 direction are interconnected. If annealing takes place in a magnetic field, the magnetic dipolar energy may have a selected effect, resulting in a preferential elongation of the Fe-Co phase. It is quite possible that the whole process can be described by the diffusion equations worked out by Zijlstra2 if only surface and magnetic free energies have to be taken into account. Tempering of Alnico alloys after optimum cooling does not result in significant changes in the morphology of the microstructure. The increase of coercivity is then very probably connected with an exchange of atoms between α and α′, resulting in an increase in the difference in magnetization between the phases. However, when alloys which have undergone spinodal decomposition in the temperature region close to the solubility curve are rapidly cooled, the subsequent tempering does not result in optimum properties. In this case a secondary spinodal decomposition in the Ni-Al phase was observed.