The effect of solidification history on the resultant microstructures in atomized Al-3Fe and Al-7Fe powders is studied, with particular emphasis on the relationships between droplet size, undercooling and phase stability. The atomized Al-Fe powders exhibit four microstructural features, i.e. Al3Fe phase, Al + Al6Fe eutectic, alpha-Al dendrite and a predendritic structure. The presence of these is noted to depend on a kinetic phase competitive growth mechanism, which was determined by the initial undercooling experienced by the powders. The results of scanning electron microscope analysis demonstrate that the content of Fe in the alpha-Al phase increases with decreasing powder particle size, i.e. for Al-3 wt % Fe powders, the content of Fe in the alpha-Al phase is 2.21 and 2.56 wt % corresponding to powder particle sizes of 90 and 33 mu m, respectively; for Al-7 wt % Fe powders, the content of Fe in the alpha-Al phase is 5.51 and 5.98 wt % corresponding to powder sizes of 90 and 33 mu m, respectively. In the present study, homogeneous nucleation undercooling, corresponding to the alpha-Al phases, is also estimated using an existing correlation.