This study focuses on the difference in microstructural features and physical properties of Al-2Fe and Al-4Fe alloys subjected to large plastic straining. The difference in the intermetallic particle morphology in the initial state is shown to be a key parameter influencing the particle and grain fragmentation process and, as a result, the properties of these two alloys. We demonstrate that the shape and average size of Al-Fe intermetallic particles provide stronger effect on the microstructure evolution during high pressure torsion (HPT) than their volume fraction. The formation of Fe supersaturated solid solution in Al in these two alloys during deformation is discussed in connection to the morphology of the intermetallic phase. The major microstructural attributes, responsible for the solid solution formation, are highlighted.