Composition gradient and phase separation at the nanoscale have been investigated for arc-melted and solidified with equiatomic Fe-Cu. Diffraction studies revealed that Fe and Cu exhibited phase separation with no trace of any mixing. Microscopy studies revealed that immiscible Fe-Cu form dense bulk nanocomposite. The spatial distribution of Fe and Cu showed existence of two distinct regions, i.e., Fe-rich and Cu-rich regions. Fe-rich regions have Cu precipitates of various sizes and different shapes, with Fe forming meshes or channels greater than 100 nm in size. On the other hand, the matrix of Cu-rich regions formed strips with fine strands of nanosized Fe. Macromagnetic response of the system showed ferromagnetic behavior with a magnetic moment being equal to about 2.13 μB/Fe atom and a bulk like negligible value of coercivity over the temperature range of 5–300 K. Anisotropy constant has been calculated from various laws of approach to saturation, and its value is extracted to be equal to 1350 J/m3. Inhomogeneous strain within the Cu and Fe crystallites has been calculated for the (unannealed) sample solidified after arc-melting. Annealed sample also exhibited local inhomogeneity with removal of inhomogeneous strain and no appreciable change in magnetic character. However, for the annealed sample phase separated Fe exhibited homogenous strain.