The deformation behavior as a function of applied strain was studied in a nanostructured Ni-Fe alloy using the in situ synchrotron diffraction technique. It was found that the plastic deformation process consists of two stages, undergoing a transition with applied strain. At low strains, the deformation is mainly accommodated at grain boundaries, while at large strains, the dislocation motion becomes probable and eventually dominates. In addition, current results revealed that, at small grain sizes, the 0.2% offset criterion cannot be used to define the macroscopic yield strength any more. The present study also explained the controversial observations in the literature.