Transformation‐induced fine substructures in iron‐nickel martensites have been studied by x‐ray diffraction and electron microscopy. The dislocation density, microstrains, and twinning increased while the dislocation cell size (particle size) decreased, with increasing nickel contents. The effect of the substructures on the hardness and yield strength of the martensites has been discussed. The anisotropic particle‐size values obtained from x‐ray analysis are shown to be due to faulting and/or twinning. From the compound fault probability (1.5α + β) obtained through Warren‐Averbach analysis and the β values obtained from measured peak asymmetry, the stacking‐fault probability α values have been derived and the stacking fault energy γ of the bcc iron‐nickel alloys have been calculated. By extrapolation of the stacking‐fault energy‐composition curve a γ value of 50 ± 10 erg/cm2 has been estimated for pure iron.