The thermal stability and coarsening of nanostructures is of both scientific interest and of engineering significance in order to produce thermally stable nanomaterials. Real time observations were carried out using ultra high vacuum (UHV) in situ TEM to investigate the coarsening process of a highly modulated nanolamellar structure obtained by crystallization of a Co based Co65Si15B14Fe4Ni2 amorphous magnetic alloy. The coarsening process consisted of three steps: (a) precipitation of spherical fine precipitates; (b) continuous coarsening of the nanolamellar structure at the surface and precipitation at the grain boundaries; and (c) formation of a stable multiphase structure. Due to surface effects, continuous coarsening of nanolamellar structure was observed during in-situ annealing; this mechanism was different from that of the coarsening process found during conventional annealing. Discontinuous coarsening from grain boundaries, which dominates the coarsening process in the conventional annealing of bulk sample, also occurred in in-situ annealing of thin sample. The driving force for coarsening of the nanolamellar structure from interlamellar interfaces, grain boundaries and surfaces is discussed. (C) 2005 Springer Science + Business Media, Inc.