We investigated the phase formation sequence in the reaction of multilayer thin films of Nb/Al with overall compositions of 25 and 33 at.% AI. We report novel phenomena which distinguish thin-film reactions unequivocally from those in bulk systems. For sufficiently thin layers composition and stability of product phases are found to deviate significantly from that predicted from the equilibrium phase diagram. We demonstrate that in the Nb/Al system the length scales below which such deviations occur is about 150 nm. We believe that these phenomena occur due to the importance of grain boundary diffusion and hence microstructure in these thin films.