Nanocrystallization by a ball drop test in an eutectoid steel with either pearlite or spheroidite structure has been studied. By a ball drop test, nanocrystalline layer has been formed along the surface (near the edge of the impact crater) and interior of specimen (near the bottom of the impact crater). Prior deformation of specimens has been found to reduce the number of ball drops to produce nanocrystalline layer. When the prior deformation was severe enough, one time of ball drop could produce a nanocrystalline layer. Severe shear deformation was observed at the nanocrystalline layer. This suggests that strain localization under a high strain rate deformation promotes nanocrystallization. For the samples with pearlite structure, cementite dissolved completely in the nanocrystalline layer. For the samples with spheroidite structure, most of cementite particles also dissolved by a ball drop test. A mechanism account for dissolution of spherical cementite is proposed. After annealing at 873 K for 3.6 ks, grain growth took place in the nanocrystalline region in contrast to recrystallization in work-hardened region like observed in ball milled powders. Fine cementite particles re-precipitated at nanocrystalline ferrite grain and then inhibited the grain growth effectively.