Based on a novel defactants (defect acting agents) concept (R. Kirchheim, Acta Materialia 55 (2007) 5129 and 5139), a novel method of understanding and synthesizing NC material was proposed by introducing defactants (segregating solute atoms) into the materials to ease the formation of grain boundaries (GBs) and enhance the formation ability of nanocrystalline (NC) structures. The iron-carbon system was chosen as a model system where carbon acts as the so-called defactant. Iron powders mixed with different amount of graphite were ball milled to prepare NC iron-carbon alloys with different carbon concentrations (C0). After ball milling, the as-milled powder with relatively low carbon concentration was annealed at a certain temperature to achieve saturation of GBs by carbon atoms. The microstructures of the powders were investigated by means of transmission electron microscopy (TEM) and X-ray diffraction (XRD) methods. The mean grain sizes (D) of the powders were determined by analyzing TEM dark field images and X-ray line profiles. The results indicated that once the saturation of GBs is achieved, D of the NC iron-carbon powders will be strongly dependent on C0 and will follow a simple mass balance of carbon in a closed system, i.e. D=3ΓgbVm/(C0-Cg) with Cg the carbon concentration in grains, Γgb the grain boundary excess, and Vm the molar volume of iron. Based on the experimental results, the formation of NC iron-carbon alloys was treated in detail within the framework of the defactant concept. The increase of C0 significantly reduces the formation energy of GBs, leading to a substantial decrease of D.