Semiconducting β-FeSi2 is a candidate thermoelectric material whose constituents are abundant and eco-friendly, but significant improvements in the relevant properties are needed. This work investigates eutectoid decomposition, α-FeSi2 → β-FeSi2 + Si, as a means to modify microstructure and control thermal transport. Process conditions are adjusted to strongly affect both the microstructural lengthscales and morphology, and hence the thermal conductivity. Low temperature annealing of a hypoeutectic sample produces cooperatively-grown Si lamellae, which then decompose into Si nanowires by Rayleigh instability upon further aging. We show that nucleation of eutectoid colonies occurs preferentially on cracks, while at smaller undercooling, nucleation also occurs on eutectic Si particles. The growth velocity, v, and interlamellar spacing, λ, of the pearlitic colonies obey a relation of the type vλn = f(T). This sets the bounds of the activation energy for the diffusion mechanism, although the exact mechanism cannot be specified. Nanostructuring of eutectoid Si increases heterointerface density by 40x, with a concomitant reduction in thermal conductivity of 2x. The thermal boundary conductance is determined for the β-FeSi2/Si heterointerface, which shows that this interface only weakly scatters phonons.