The effect of high pressure torsion (HPT) on the microstructure evolution of Cu-Fe 36% wt alloy has been studied. The initial Cu-Fe alloy has a dendritic structure, the length of dendrites is up to 100 gm. As a result of HPT (20 anvil rotations at 400 °C) the refinement of a- Fe dendrites occurs, and a microstructure with Fe inclusions with a size from 0.1 to 5 gm uniformly distributed in the copper matrix forms. Subsequent annealing at 700 °C for 1 hour results in some coarsening of a-Fe particles, as compared to the state after HPT. However, the dendritic structure typical of the cast alloy does not recover; it remains dispersed with a size of a-Fe particles less than 20 gm. As a result of HPT the alloy microhardness increased from 1800 to 4000 MPa. The subsequent annealing at T 700 °C decreased the microhardness to 2700 MPa, but this value is 1.5 times higher than that in the initial as-cast state.