Mechanical properties, microstructure of the Sn–38wt. %Pb eutectic and the development of deformation - induced diffusion processes on interphase boundaries (IB) were investigated. Experiments were carried out both in deformed and annealed states of eutectic using micro- and nanoindentation, SEM, AFM and optical microscopy techniques. It was found that the deformation of the annealed alloy is localized at the Pb/Sn interphase boundaries and occurs by grain boundary sliding (GBS) accompanied by sintering micropore processes under the action of the capillary forces on the Pb/Sn IB. During severe plastic deformation of Sn-Pb eutectic phase transition in the Sn grain boundary occurs. This deformation-induced process takes place due to the wetting of tin with Pb. These diffusion accommodation processes (sintering and wetting) are facilitated by the low values of the Pb/Sn interphase energy (0.07 J/m2). Wetting is thermodynamically favourable because the condition γgb > 2 γib is satisfied and it is also kinetically allowed due to the relatively high homologous temperature (> 0.5•Tm). The obtained values of the nanohardness and elastic modulus evidence that the IBs in the Sn–Pb eutectic have to be considered as a separate quasi-phase with its own properties.