The nickel-free austenitic stainless steel produced by solution nitriding (Fe-25%Cr-1%N alloy) was subjected to isothermal heat treatment, and then the microstructure formed through the decomposition of austenite was investigated in terms of the morphology of eutectoid structure and the size of eutectoid block. On the isothermal heat treatment at 873K-1223K for the solution-nitrided steel, the austenite decomposed to eutectoid structure composed of ferrite and Cr 2N nitride. This transformation could be completely finished after long time heat treatment in the above temperature range. The nose temperature of T.T.T. curve was around 1173K, and the time to start the eutectoid transformation was only 100-200s. The eutectoid structure was formed mainly along austenite grain boundaries and then grew into the untransformed austenite region. Finally, the austenite was completely decomposed into ferrite and Cr2N nitride. As a result of OIM observation for the specimen after isothermal heat treatment, the eutectoid structure was found to be divided into small-sized ferrite blocks, in which lamellar Cr2N plates were finely distributed. The block size and the mean ferrite path of eutectoid structure were decreased with lowering the heat treatment temperature. In the 873K heat-treated material, these values were estimated at 20 microns and 0.1 microns, respectively.