We perform an investigation of ion-beam mixing in the immiscible system Ag–Cu based on cross-sectional transmission electron microscopy. Multilayered samples consisting of ten periods of (6.7 nm Cu/11.2 nm Ag) are irradiated at temperatures ranging from 25 to 225 °C with normally incident 1 MeV Kr ions to doses in the range 1–2×1016 ion/cm2, enough to reach a nonequilibrium dynamical steady state. Regardless of the irradiation temperature, extensive grain growth takes place. At intermediate temperatures, competition between thermal decomposition and irradiation mixing results in a nanometer-scale phase separation. This spontaneous decomposition demonstrates that ion-beam mixing can be used as a processing tool to synthesize nanocomposite materials. © 2001 American Institute of Physics.