Grain-boundary relaxation in nanocrystalline Fe was studied by high-resolution transmission electron microscopy (HREM), and its effect on plasticity was characterized by nanoindentation. Samples with grain size of 9.8 nm were synthesized by mechanical attrition and subsequently annealed at low temperatures (80 and 100 degrees C) without affecting the grain size. While the hardness is not significantly affected by annealing, the strain-rate sensitivity peaks as a function of annealing time, suggesting two competing processes. HREM images show grain-boundary relaxation during annealing. Initially disconnected lattice planes were observed to evolve into a more continuous and ordered structure with regularly spaced grain-boundary dislocations. (C) 2006 American Institute of Physics.