A study of the mechanisms of pearlite spheroidization under static annealing conditions was carried out in two materials — AISI 1080 steel and pure Fe-C alloy. By electrolytically etching away the ferrite matrix, the morphology of the cementite phase was directly investigatedvia SEM and TEM techniques. It was clearly observed that the initiation and development of spheroidization are associated with morphological faults such as terminations, holes, and fissures in the cementite plates. During spheroidization the recession of terminations and the expansion of holes and fissures led to the break-up of large cementite plates into small segments. The migration of these faults is anisotropic. The preferred orientations, [010] and [210] directions in the (001) cementite plane, were determined by TEM analysis. This anisotropic morphological change is attributed to the anisotropy of the α/Fe3C interfacial energy. All the experimental evidence strongly supports the idea that the fault migration theory is the main mechanism governing spheroidization.