Nanocrystalline Al64Cu23Fe13 icosahedral quasicrystal has been obtained by milling of solid quasicrystal precursors prepared by arc-melt. The local structure around Fe atoms was studied by Mössbauer spectroscopy using a quadrupole splitting distribution method. Mössbauer results of annealed and milled samples show the existence of a broadened distribution of Fe sites which is associated to intrinsic disorder. The structural characterization was determined using x-ray diffraction. The average grain-size of the nanostructured quasicrystal, obtained from the line broadening of the X-ray diffraction peaks, was estimated to be of the order of 10 nm for a sample milled by 5 h.