An iron-molybdenum alloy powder was extensively deformed by high energy milling, so to refine the bcc iron domain size to nanometer scale (~ 10 nm) and introduce a strong inhomogeneous strain. Both features contribute to comparable degree to the diffraction peak profile broadening, so that size and strain contributions can be easily separated by exploiting their different dependence on the diffraction angle. To assess the reliability of Line Profile Analysis, results were compared with evidence from other techniques, including scanning and transmission electron microscopy and X-ray small angle scattering. Results confirm the extent of the size broadening effect, whereas molecular dynamics simulations provide insight into the origin of the local atomic, inhomogeneous strain, pointing out the role of dislocations, domain boundaries and interactions among crystalline domains.