Fe-Ni alloy nanoparticles were prepared by ERC (Evaporation and Rapid Condensation) method, and the crystal structure and the behavior of martensite for the nanosized alloy particles were investigated by X-ray diffraction analysis. The relation between the rate of martensite transformation and the internal strain of austenite was discussed. The lattice spaces of austenite and martensite for the nanoparticles agreed with those of the bulk materials. The rate of martensite transformation from austenite and the internal strain of austenite was reduced with decreasing the average size of Fe-Ni nanoparticles. It was thought that the residual austenite in the Ni content range of 11∼l5at% was caused by the internal strain, and the residual martensite in the Ni content range of 32∼36at% had its origin in the high surface energy of nanoparticles.