The thermal decomposition behaviour, the microstructural evolution and its influence on the mechanical properties of a supersaturated Cu–Co solid solution with ∼100 nm average grain size prepared by severe plastic deformation is investigated under non-isothermal and isothermal annealing conditions. Pure fine-grained Cu and Co exhibit substantial grain growth upon annealing, whereas the Cu–Co alloy is thermally stable at the same annealing temperatures. The annealed microstructures are studied by independent characterisation methods, including scanning electron microscopy, electron energy loss spectroscopy and atom probe tomography. The phase separation process in the Cu–Co alloy proceeds by the same mechanism, but on different length scales: a fine scaled spinodal-type decomposition is observed in the grain interior, simultaneously Co and Cu regions with a larger scale are formed near the grain boundary regions. Subsequent grain growth at higher annealing temperatures results in a microstructure consisting of the pure equilibrium phases. Such mechanisms can be used to tailor nano structures.