Microstructural instability modes, phase transformation and mechanical properties evolution of a fine-grained fully-lamellar Ti–44Al–6Nb–1Mo−0.3(B, Y) (at.%) alloy were investigated systematically. During isothermal exposure at application temperatures, dramatic discontinuous precipitation of γ and βo (ωo) grains proceeded along boundaries of prior lamellar colonies, i.e. via a transformation of L(α2/γ) → γ + βo (ωo). Meanwhile, the internal lamellar structures degraded by α2-lath dissolution and simultaneous γ-lath coarsening. Furthermore, thermal loading was found to contribute to the above decomposition processes. However, almost no βo and βo (ωo) grains formed in the interiors of lamellar structures. The precipitation of equilibrium phases γ, β and ωo abided by normal crystallographic orientation relations with their respective parent phases. The present microstructural decomposition was considered to be essentially induced by thermodynamic instability of α2 laths and high interfacial energy of nanoscaled lamellar structures. Finally, it was demonstrated that this microstructural degradation caused both high-temperature strength and room-temperature ductility to deteriorate.