The shock-induced phase transformation of nanocrystalline iron with different grain sizes is investigated by using molecular dynamic simulations. The critical shock stress for shock-induced phase transformation (from body-cubic centered α phase into hexagonal-close packed ε phase) of nanocrystalline irons is about 15 GPa. Under shock compression, the nanocrystalline irons first experience elastic deformation, then plastic deformation purely caused by grain boundaries, after that phase transformation nucleated mostly at the grain boundaries, and finally nucleation areas expanding into the entire samples. These processes can be reflected by the stress profile and the particle velocity profile, and also be distinguished by local atomic structures analyses in the corresponding areas. The microstructures of the shocked samples consist of grain boundary and hexagonal-closed packed new phase with the face-cubic centered atoms as the twin boundary. The grain size obviously influences the deformation of grain boundary and the microstructure after shock compression, and turns to change the profiles of stress or velocity. The mechanism is primarily analyzed.