Isothermal annealing induced nanocrystallization of a Fe74.5Cu1Si13.5B9Al2 amorphous alloy and the impact of the nanocrystallization on mechanical properties were investigated. Annealing at 831 K results in the formation of body-centered cubic α-Fe(Si) nanocrystals in the amorphous matrix. Increasing the annealing time increases both the grain sizes and lattice parameter of the nanocrystalline α-Fe(Si) phase. The latter is caused by the separation of the Si from the α-Fe(Si) phase. Al in the alloy does not effectively inhibit the grain growth of α-Fe(Si) nanocrystals during the annealing process. Isothermal annealing effectively increases the hardness and Young's modulus of the alloy. In the testing range of the present study, the highest hardness (14.0 GPa) and Young's modulus (193.4 GPa) are achieved after annealing for 60 min and 120 min, respectively.