Single crystals of a Cu-Fe alloy, which contained spherical gamma-Fe particles, were compressed up to shear strain of 0.17 in liquid nitrogen bath. In the process of straining the structural (optical and TEM) observations in as-deformed and post-deformation annealed samples were provided. The substructure of deformed samples was characterized by slightly developed cell structure and lack of distinct layer-like arrangements of dislocations. Three kinds of particles were found: coherent and semi-coherent f.c.c. gamma-Fe and martensiticly transformed b.c.c. alpha-Fe. The critical diameter for coherency loss was found to be 58 nm at the initial stage of deformation decreasing with strain to 50 nm. These values coincided with the theoretical estimations. It was suggested that relaxation of coherency strains around gamma-Fe particles by the generation of interface dislocations might occur prior to the martensitic transformation. This assumption might explain the particle size dependency of martensitic transformation.