A new approach for deposition of in situ nanocrystalline Fe–Si alloy coating on mild steel substrate by mechanical milling has been proposed. The thickness of nanocrystalline coating was a function of milling time and speed. Milling speed of 200 rpm was the optimum condition for development of uniform, hard, adherent and dense 200–300 μm thick nanocrystalline coating. A possible mechanism, consisting of three steps like repeated impact, cold welding and delamination, has been proposed for the formation of coating. These coatings have resulted in the increase of the hardness to almost double the value before coating.