The formation of micro-sized droplets in the matrix of the primary phase of Ag Ge alloys and their undercooling behaviour were investigated. Thermal cycling consisted in equilibration of hypoeutectic alloys near the eutectic temperature in the two-phase liquid solid region followed by up-quenching of alloys at 30-50°C above the eutectic temperature and their subsequent slow cooling. A wide size range of droplets was generated in the matrix of the silver-rich phase by repeated thermal cycling of the alloy. During slow cooling, droplets of silver-rich liquid exhibited a maximum undercooling of 81°C below the eutectic temperature. Examination of the solidification structure of the undercooled alloys, by X-ray diffraction, polarized light microscopy and electron probe micro analysis techniques, indicated the presence of a metastable phase. The mechanism of formation of droplets and the nature of non-equilibrium solidification of the undercooled melt of silver germanium alloys, are discussed.