Far from equilibrium, immiscible nanocrystalline Ag-Cu alloy thin films of nominal composition Ag-40 at.% Cu have been deposited by co-sputter deposition. Both X-ray and electron diffraction studies indicate that the as-deposited films largely consist of nanocrystalline grains of a single alloyed face-centered cubic (fcc) phase. However, detailed three-dimensional atom probe tomography studies on the same films give direct evidence of a nanoscale phase separation within the columnar grains of the as-deposited Ag-Cu films. Subsequent annealing of these films at 200 A degrees C leads to two effects; a more pronounced nanoscale separation of the Ag and Cu phases, as well as the early stages of recrystallization leading to the breakdown of the columnar grain morphology. Finally, annealing at a higher temperature of 390 A degrees C for a long period of time leads to complete recrystallization, grain coarsening, and a complete phase separation into fcc Cu and fcc Ag phases.