Galfenol owing excellent deformation due to lattice softening are regarded as a new generation of smart magnetostrictive materials. However, the lack of direct probes of phase transformation and intermediate phase related to lattice softening blocks the comprehensive understanding of their intrinsic magnetostrictive mechanism and further improvement of their performance. In this work, we firstly report an atomic observation of ω phase transformation in Galfenol under low temperature aging by spherical aberration-corrected transmission electron microscopy. The ω precipitates with two variants are directly probed to be decomposed from FeGa bcc matrix with the assistances of both spinodal decomposition and displacive transformation. Their orientation relationships with the long range ordered bcc structure of D03 can be well indexed into (0003)ω1[112¯0]ω1 || (44¯4¯)D03[01¯1]D03 || (4¯401¯)ω2[112¯0]ω2. Density functional theory calculations unveil the precipitate of ω phase in Galfenol is theoretically possible. Further magnetostrictive measurements reveal the ω phase precipitates deteriorate the magnetostriction of Galfenol as empirically expected. Our work is believed to contribute a further insight of precipitate and structural evolution in Galfenol and is significant to maintain the magnetostriction performance of Galfenol in service.