In this paper, we present a systematic investigation on phase transition and coalescence behavior of fcc Fe nanoparticles under heating by molecular dynamics approach with Finnis-Sinclair many-body potential. The simulation results show that for fcc Fe nanoparticles, the martensitic transformation from fcc to bcc phase occurs prior to the melting. Relative rotation occurs between two like nanoparticles, but it does not happen in two nanoparticles with different sizes. A small nanoparticle prfers to adhere to a large one and is melted with temperature increasing, resulting in the final formation of a larger particle.