Metal foils generally show lower ductility than sheet metals. In this study, we investigated the effect of grain size on elongation and ductile fracture behavior of Al-Fe alloy foils using tensile tests with digital image correlation (DIC) measurements and microstructure observations. Grain refinement increased the total elongation: notably, local elongation increased even for foils. With grain refinement, the strain rate sensitivity exponent (m value) increased, and surface roughening during plastic deformation was suppressed, thus improving local elongation. On the other hand, coarse grains promoted surface roughening and reduced uniform elongation despite a high work hardening exponent (n value). To evaluate foil elongation, it is necessary to consider surface roughness alongside the n value and m value. To suppress surface roughening, both grain size and its uniformity must be controlled.