Metastable phase was observed in as-solidified microstructure of undercooled Fe-Co alloy, provided that the initial undercooling (T) of the melt exceeds the critical value. On this basis, the forming mechanism and stability of metastable phase were investigated. The forming mechanism of metastable phase in undercooled Fe-Co alloy was concluded as cooperative effect of “competitive nucleation—remelting—extensive growth—incomplete solid-state transformation” in this work. With the increase of annealing time, the number and dimension of metastable phase decreased at the same time. Moreover, metastable phase was transformed to stable phase completely when annealing time increased to three hours.