Upon annealing, the stoichiometric nanocrystalline intermetallic compo
und Pd3Zr, prepared by high-energy ball milling, simultaneously underg
oes grain growth and precipitation of a large fraction of the supersat
urated solid solution Pd(Zr); at high annealing temperatures the mater
ial transforms back to the single-phase intermetallic state. We presen
t an analysis of the thermodynamics of nanocrystalline line compounds,
arguing that quite general assumptions fur the material constants of
grain boundaries suggest an instability of the overall stoichiometric
nanocrystalline compound with respect to precipitation of a second pha
se, in accordance with the experimental observation.