The current study aims to analyze the nanomechanical properties of phases formed in different layers of the dissimilar junction created at 1050 °C for 30 min between the two alloys austenitic steel (SS-304L) and Zircalloy-4 (Zy-4). Atomic force microscopy (AFM) and scanning electron microscopy (SEM) were employed to observe residual imprints’ morphology to understand the nature of deformation. It was observed that the ε-Zr(Fe,Cr) 2 intermetallic exhibited the highest nanohardness value and elastic recovery rate, while the austenitic steel (SS-304L) displayed the lowest nanohardness value and elastic recovery rate. It is noteworthy that higher phase hardness correlates with reduced maximum and residual indentation penetration depths. The significant pile-up observed in the α-(Fe,Cr) phase of the LI layer indicates considerable plastic flow during the nanoindentation test. The crack was observed only at the extremely fragile phase of the intermetallic compound Zr(Fe,Cr) 2 .