This article focuses on the microstructure of medical-grade P558 (ASTM F2581) stainless steel produced by mechanical alloying and liquid-phase sintering. Rietveld X-ray diffraction and transmission electron microscopy reflect that the mechanically alloyed stainless steel powder is a nanocrystal dispersed amorphous matrix composite.Mn-11.5 wt pct Si eutectic alloy as additive improves densification of the synthesized P558 alloy via liquid-phase sintering mechanism. X-ray mapping shows that after sintering at 1323 K (105°C) for 1 hour, a uniform distribution of dissolved Mn and Si is achieved. Moreover, the development of a nanostructured, fully austenitic stainless steel after sintering at the same temperature is realized by X-ray diffraction and transmission electron microscopy.