Phase transformation reactions, occurring during heating of as-atomised Al-6.5Fe-1.5V powders, extrusion of the powders, and heating of the as-extruded alloys produced from the powders, have been studied by DSC, XRD and TEM. The DSC studies of the as-atomised powders revealed several phase transformation reactions. The solid solution in zone A decomposed to form metastable phases at 360°C. These metastable phases further transformed to form equilibrium phases at 500°C. The microquasi-crystalline icosahedral (MI) phase particles present in zone A and zone B transformed to equilibrium phases at 500°C. The globular clusters of microquasi-crystalline icosahedral (GCMI) phase particles in zone C transformed polymorphously to icosahedral (I) phase particles at 450°C. These reactions were believed to occur during extrusion of the powders. During heating of the as-extruded alloys produced from coarse powder particles, I phase transformed polymorphously to hexagonal phase at 550°C. The hexagonal phase decomposed to monoclinic Al45(V, Fe)7 and Al13Fe4 phases upon heating for longer times.