The phase transformations and the development of the microstructure of a Nd16Fe76B8 alloy during the disproportionation stage of the solid hydrogenation-disproportionation-desorption-recombination (S-HDDR) process have been studied in detail by means of conventional scanning electron microscopy (SEM) and high resolution SEM. In situ electrical resistivity measurements have been used as a means of monitoring and controlling the progress of the S-HDDR reaction. The non-decrepitated samples were quenched under vacuum from various stages (10, 20, 120 min and 20 h) of the disproportionation process at T=800 degrees C and p(H-2)=0.7 bar. Backscattered electron images reveal that the Nd2Fe14B matrix phase disproportionates from the Nd-rich grain boundary phase inwards, resulting in the development of a cellular, lamellar-type substructure. Spherical Nd-rich regions trapped along cracks during solidification also act as a starting point for the disproportionation reaction. The eutectoid-type transformation, initiated by the absorption of hydrogen, produces colonies of what appear to be alternating lamellae of Fe-rich and Nd-rich phases with an estimated width of 20 nm. Extended exposure to hydrogen results in the decomposition of the NdFe4B4 phase by reaction with the disproportionated matrix.