The effect of grain size upon the strength of nanocrystalline iron/copper (Fe/Cu) composites has been explored. Composites of composition 60 Fe/40 Cu (by weight) were produced by consolidation of ball-milled powders, with as-processed grain size ranging from 80 to 150 nm. All composites displayed negligible strain hardening and a symmetric response in tension and compression. The strength increases with diminishing grain size, and the upper and lower yield points are a consequence of the dissolved carbon in the Fe phase. The nanocrystalline composites develop shear bands in both tension and compression, and the geometric evolution of these bands is determined. The width of each band and the average local shear strain within it increases with increasing global plastic strain. AFM measurements reveal that the shear strain within each band has strong spatial gradients.