FeSi2 precipitates were produced in Si(001) wafers by an ion-beam induced epitaxial crystallization process and subsequently annealed at temperatures in the range 650–900 °C. The resulting precipitate coarsening and phase transition were studied by transmission electron microscopy. The coarsening process basically involves the evolution of plate-shaped precipitates. The lengthening rate of the precipitates is considerably greater than the thickening rate, because the two broad faces of a plate are coherent or semicoherent, while the plate edges are incoherent. The lengthening kinetics was shown to be volume-diffusion controlled and obey a cube power law. The corresponding activation energy was determined to be 3.55 eV, in excellent agreement with the value predicted by the classical Ostwald ripening model. In contrast, we demonstrated that the thickening process is interface controlled, which involves the migration of the interfaces via a ledge mechanism. Accordingly, an apparent activation energy of 2.18 eV was obtained. The precipitate coarsening is accompanied by phase transitions. Upon annealing at 650 °C, it was observed that γ-FeSi2 precipitates tend to transform from a fully aligned (A-type) to a twinned (B-type) orientation with respect to the Si matrix. For higher temperature anneals, nearly all the precipitates transform from the γ phase into the β phase, except those having a relatively small diameter (<≊5 nm) which remain as A-type γ-FeSi2. These observations suggest that the phase transition of FeSi2 is size dependent. This can be understood, in terms of the interfacial energy versus the volume free energy of a precipitate as a function of precipitate size.