Effects of Fe concentration in solid solution and of a dispersed phase on work softening and recrystallization of Al-0.12 to 2.85%Fe alloys were investigated. The 0.2% proof stress of the Al-Fe drawn wire rapidly increases at the early stage of deformation. Work hardening of the alloys containing high concentration of Fe in solid solution is unchanged in the heavy deformation region. The alloys containing low concentration of Fe in solid solution are susceptive to work softening. The half softening temperature at isochronal annealing drastically drops with dilution of Fe in solid solution and with increase of the dispersed phase and cold working ratio. The cellular structure is developed in the cold worked alloys of high Fe concentration in solid solution. Recrystallized grains are observed near the precipitates in the alloys of low Fe concentration in solid solution.