A comprehensive investigation of microstructure evolution upon annealing in the temperature range between 100°C and 450°C in SPD-processed nanocrystalline iron had been conducted using transmission and orientation imaging microscopy, and XRD analysis. The asprocessed microstructure was typical of severely deformed metals consisting of grains with a mean size of 110 nm, each subdivided by a network of subgrain boundaries. Additionally, measurements of microstrains using XRD found a very high microstrain level of 0.003 in this material. After annealing at 200°C a drastic decrease of microstrains was observed; whereas no notable changes in the size of grains and subgrains as well in misorientation spectra have been revealed. Thus we relate this decrease of microstrains with recovery of non-equilibrium grain boundaries. Annealing at higher temperatures hadn’t led to further decrease of microstrains, but resulted in slight subgrain growth from 65 to 78 nm accompanied by increase of mean misorientation angle from 5° to 6.3°at 450°C. This indicates the occurrence of coalescence of subgrains as additional recovery mechanism.