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Nanostructured steels are expected to have enhanced irradiation tolerance and improved strength. However, they suffer from poor microstructural stability at elevated temperatures. In this study, Fe–21Cr–5Al–0.026C (wt%) Kanthal D (KD) alloy belonging to a class of (FeCrAl) alloys considered for accident‐tolerant fuel cladding in light‐water reactors is nanostructured using two severe plastic deformation techniques of equal‐channel angular pressing (ECAP) and high‐pressure torsion (HPT), and their thermal stability between 500–700 °C is studied and compared. ECAP KD is found to be thermally stable up to 500 °C, whereas HPT KD is unstable at 500 °C. Microstructural characterization reveals that ECAP KD undergoes recovery at 550 °C and recrystallization above 600 °C, while HPT KD shows continuous grain growth after annealing above 500 °C. Enhanced thermal stability of ECAP KD is from significant fraction (>50%) of low‐angle grain boundaries (GBs) (misorientation angle 2–15°) stabilizing the microstructure due to their low mobility. Small grain sizes, a high fraction (>80%) of high‐angle GBs (misorientation angle >15°) and accordingly a large amount of stored GB energy, serve as the driving force for HPT KD to undergo grain growth instead of recrystallization driven by excess stored strain energy.