We report the formation of an amorphous phase in nanosized Pi particles embedded in an Al-based glassy alloy matrix. High-resolution electron microscopy (HREM) has been used to show that the particles contain crystalline and amorphous portions. A depression of the melting point by more than 100 K of the crystalline portion of the Pi particles was found by differential scanning calorimetric studies and by in-situ electron microscopy using a heating stage. The same techniques established the absence of an amorphous phase in the particles when the matrix is crystallized. It is shown that the formation of the amorphous phase and the depression of the melting point cannot be explained by the pressure developed by the volume change during solidification in this constrained system.