Iron phosphate glass (IPG) is considered as a suitable matrix for the immobilization of nuclear waste containing higher concentration of Cs, rare earth, Mo and Cr. The central issue, while disposing nuclear waste in glass matrices, is the damage in glass matrices due to the ballistic processes caused by atomic displacements due to α-particles and the recoiling of heavy nuclei resulting from actinide decay. Ion irradiation produces similar kind of damage, and hence the samples are irradiated with 4 MeV O + (self) ion. The microstructural studies were carried out using transmission electron microscopy (TEM) for as-prepared, annealed and ion irradiated samples. It is observed that ion irradiation in IPG leads to the formation of nanocrystals with different phases containing Fe, P and O. Thermally activated crystallization process is ruled out based on the non-equilibrium experimental conditions. In the present experiments, stress driven crystallization mechanism was invoked. The stress, around the ion track formed during ion irradiation, is larger than the yield strength of the glass and hence, the surrounding matrix undergoes substantial deformation resulting in the formation of shear bands. Nucleation of nanocrystals is driven by the stress in the vicinity of the shear bands.