The nanocrystalline Fe-N films with a mixture of ε-Fe3N and α-Fe phase synthesized on NaCl (1 0 0) substrate by dc magnetron sputtering were annealed at different temperatures in order to investigate their thermal stability and magnetic properties. The structure, morphology, and magnetic properties of the samples were characterized using X-ray diffraction (XRD), transmission electron microscopy (TEM), and superconducting quantum interference device (SQUID). The results showed that the release of nitrogen from nanocrystalline ε-Fe3N phase during annealing led to the formation of γ'-Fe4N phase. At annealing temperature of 350℃, nanocrystalline γ'-Fe4N phase tended to decompose to the more stable phase γ'-Fe. This transition deposition temperature was lower than what had been reported that the single-phase γ'-Fe4N was still stable at 400℃. As the annealing temperature increased, the saturation magnetization (Ms) for the films with a mixture of ε-Fe3N and α-Fe phase did not change significantly, but decreased drastically for the films with a mixture nanocrystalline γ'-Fe4N and α-Fe phase. It was also found that both the relief of the stress and an increase in grain size during annealing had significant influences on the coercivity for the films with mixed ε-Fe3N and α-Fe phases. The coercivity of the films decreased when the phase transformation from nanocrystalline ε-Fe3N phase to γ'-Fe4N phase occurred.