In this study, nanostructured Fe powders were synthesized following 10 hours of high-energy ball milling with a superimposed dielectric barrier discharge plasma (DBDP). The mean size of the milled powder was approximately 100 nm with an average grain size of 16.2 nm. The influence of DBDP on the underlying grain refinement mechanisms during ball milling was investigated by scanning electron microscopy (SEM), transmission electron microscopy (TEM), X-ray diffraction (XRD) and BET methods. Our results show that the Fe particles displayed an extraordinary plasticity during the early milling stages under the action of DBDP, and that the plastic deformation experienced by the Fe particles during this stage was more severe than that present in normal milling. A high concentration of spherical Fe particles, approximately 50–100 nm in diameter, was documented via TEM. We propose that these spherical particles were generated via high temperature disintegration as a result of DBDP electron bombardment during ball milling. Our results suggest that it may be possible to significantly refine metallic powders during milling via the superimposition of DBDP.