The hardness and elastic behavior of Fe–Ag (001) multilayered thin films is presented. Significant enhancements in the hardness were observed that followed a Hall–Petch‐type dependence on bilayer thickness. A reduction in the flexural elastic modulus of 55% relative to the large bilayer thickness value was observed when the bilayer thickness was reduced to 5 nm. Concomitant with the elastic modulus reduction was a variation in the interplanar spacing perpendicular to the plane of the film. It is shown that these behaviors are generally consistent with a model based on the effects of interface stresses. Using this model, an interface stress for Fe–Ag (001) of approximately −1.8 N/m was obtained. ©1995 American Institute of Physics.