Nanocrystalline nickel-iron layers are produced electrochemically on copper discs by varying the current density and then annealed in a vacuum furnace at a temperature range between 200 and 800 °C. Grain size, iron content, texture and microstrain of the microstructure are primarily characterized by X-ray diffraction (XRD). Instrumented indentation tests and microbending tests for mechanical characterization are carried out. The iron contents of the investigated layers are 5.7, 8.8, 13.5 and 17.7 wt.-%. By varying the annealing temperature, the reduction of the microstrains is initiated at 200 °C and ends at a temperature of about 280 °C. Primary recrystallization starts slightly higher at 220 °C and is completed at 300 °C. With higher iron content, the indicated temperatures shift to slightly higher values. Indentation modulus, Young's modulus, indentation hardness and strength change considerably after the annealing treatment. Fracture strain at the edge, as a measure of ductility, decreases immediately after annealing at 200 °C to 0 %. Low annealing temperatures occurring before the beginning of primary recrystallization lead to an increase in indentation hardness and 0.01-% offset bending yield strength R p0.01 ∗ as compared to the electrochemically deposited initial state. After annealing at high temperatures, the mechanical parameters are mostly below the initial values for electrochemical deposition. Hall-Petch (HP) behavior is observed for R p0.01 ∗, both for the electrochemically deposited specimens down to almost 6 nm and for the specimens annealed at high temperatures. Specimens annealed at low temperatures deviate from the HP straight line to higher values. In this case, an increase in strength is assumed to be due to the very small nanocrystalline (nc) grain sizes, segregation at the grain boundaries and a decrease in dislocation density. Indentation hardness measurements show almost no dependence on D −0.5 for the electrochemically deposited specimens and also for annealed specimens below 30nm grain size. Above 30nm, the indentation hardness values are considerably higher than for the HP straight line. Overall, the hardness and strength values of the nc specimens, electrochemically deposited or additionally annealed, are significantly higher than those of the microcrystalline (mc) specimens.