In nuclear power plants, ferritic steel is widely employed to manufacture components serving at lower temperature and austenitic stainless steel is usually used to manufacture components serving at higher temperature, and the two are joined by welding. As a result, there are thousands of dissimilar metal welds (DMWs) between ferritic steels and austenitic stainless steels in nuclear power plants. Recently, nickel-based filler material is preferentially used to fabricate DMWs. Due to the huge chemical composition differences and the non-equilibrium heating and cooling processes, the microstructures in the fusion zone of nickel-based weld metal and ferritic steel base metal are diverse and complex. Meanwhile, due to the mismatch of mechanical properties, the fusion zone is the weak position for the DMWs under high temperature. This work investigated microstructures in the fusion zone of nickel-based and ferritic materials by multi-scale characterization and thermodynamic analysis, and pointed out evolution and cracking behaviors of above microstructures under high temperature conditions. The results show that there was a layered martensitic structure with width of several microns along the fusion zone of nickel-based and ferritic materials, and this martensitic structure further evolved into the double-layered martensitic structures consisting of tempered martensite and quenched martensite during post-weld heat treatment. During the long term high temperature exposure of the DMWs, the layered martensite in the DMWs transformed to ferrite due to diffusion and migration of carbon atoms. Thus, the evolution process of microstructure near the fusion zone of nickel-based and ferritic materials in DMWs has been clarified. Moreover, the newly formed ferrite along the fusion zone was prone to crack under creep condition, which threatens the reliability of DMWs during high temperature service. The special microstructure in the fusion zone of nickel-based and ferritic materials and its evolution are detrimental to DMW and might result in DMW failure. This work suggests that the above risks of dissimilar material joint should be paid attention to, which is critical for service reliability of welded components in nuclear power plants.