It had been shown already earlier by X-ray microanalysis that, in positions of defect-induced junction breakdown in industrial multicrystalline (mc) silicon solar cells, iron-containing precipitates may exist. However, the nature of these precipitates was unknown so far. Here, in such positions, scanning transmission electron microscopy was performed after defect-controlled focused ion beam preparation. First of all, the defect site was localized by microscopic reverse-bias electroluminescence imaging. The high accuracy of following FIB target preparation (<0.1 μm necessary) was obtained by both, electron beam-induced current imaging and secondary electron material contrast observation during the slice-by-slice milling of the TEM specimen. By nano-beam electron diffraction (NBED) and energy dispersive spectroscopy, the iron-containing precipitates were identified as α-type FeSi2 needles, about 30 nm in diameter and several μm in length. The FeSi2 needles show preferential orientation relationships to the silicon matrix and are located in terraced large-angle grain boundaries. Elaborate nano-beam electron diffraction investigation of the FeSi2 revealed orientation relationships of the precipitate to the silicon, which confirm earlier investigations on monocrystalline material. A model explaining the defect-induced breakdown mechanism due to rod-like α-FeSi2 precipitates is presented.