A hypereutectic Al–3Fe (wt.％) alloy was subjected by rheo-extrusion, and the effect of sub-rapid cooling and shear defor-mation on the refinement of Fe-rich phase was investigated. The results showed that both the primary Fe-rich phase and eutectic Fe-rich phase in the solidified Al–Fe alloy were finer than the platelike Fe-rich phase in the as-cast Al–Fe alloy with the same content of Fe. The solidified Al–Fe alloy was subjected to three stages of shear deformation, and both the primary Fe-rich phase and eutectic Fe-rich phase were fractured and the average length was refined to 400 nm, while Fe-rich phase in the as-cast Al–3Fe (wt.％) alloy was platelike and its average length was 40 μm. The tensile strength and elongation of the hypereutectic Al–3Fe (wt.％) alloy containing nanosized Fe-rich phase were 162 MPa and 25.78％ while those of the as-cast Al–3Fe (wt.％) alloy containing coarse platelike Fe-rich phase were 102 MPa and 16.84％, respectively. In the refinement of Fe-rich phase in hypereutectic Al–Fe alloy during rheo-extrusion, the three stages of shear deformation contributed more than sub-rapid cooling.