To give further insight into the behavior of Fe/Dy multilayers in the crystallization from as-deposited amorphous state, free energy diagram of Fe/Dy system was constructed based on Miedema semiempirical theory. It is shown that the crystallization of amorphous films is controlled by both thermodynamic and kinetic conditions. The calculated free energies of crystalline Fe and Dy are significantly lower than those in the amorphous states, which provide thermodynamic driving force for crystallization. During annealing, the kinetic phase evolution of the multilayers is controlled by free energy barrier of nucleation and critical-size of new phase nucleus. Thus it explains the experimental results that Fe crystallites formed first followed by Dy grains, whereas crystalline Fe-Dy intermetallic compounds were not observed during annealing at moderate temperatures.