Atomic simulations are used to investigate the interaction between nanoscale interstitial dislocation loops and grain boundaries (GBs), the subsequent evolution of the GBs' structures, and the resulting impact on mechanical properties, in BCC iron. The interaction between loops and GBs — Σ 3 { 111 } and Σ 3 { 112 } — is affected by the angle (θ) between the Burgers vector and the normal to the GB plane, as well as by the distribution of free volume (FV) and stress. Loops can be totally absorbed by Σ 3 { 111 } boundaries, while the interaction with Σ 3 { 112 } boundaries is found to change the Burgers vector and habit plane after absorption, but to otherwise leave the loop intact, resulting in selective absorption. When θ = 90 o , no absorption occurs in Σ 3 { 112 } . The stress accumulation induced by the absorption affects the local mechanical properties of GBs. In nanocrystalline iron sample, a similar phenomenon is also observed, resulting in rearrangement of GBs and grain growth.