Nanocrystalline ferrite has been produced in eutectoid carbon steel with spheroidite structure through heavy deformation of ball milling. It was found that nanocrystallization of ferrite occurred as wavy band structure on the surface region of particles during ball milling, where localized heavy deformation takes place, of 0.1 mum thickness and several mum length. The volume fraction of nanocrystalline bands increases with increasing milling time until complete nanocrystallization. Together with the nanocrystallization of ferrite, the dissolution of cementite was observed. The nanocrystalline ferrite reveals a totally different morphology, microstructure and mechanical properties from the work-hardened ferrite. By annealing the deformed specimens, recrystallization was observed in the work hardened regions, while in the nanocrystalline ferrite region only a weak grain growth was observed instead of recrystallization.