Additive manufacturing of 316L/CuCrZr multi-material metallic structures has recently attracted significant attention, due to the ideal combination of structural and thermal/electrical properties. In this work, a unique multi-phase microstructure was produced with a hybrid laser-powder bed fusion (L-PBF) process combining 316L steel thin foils and CuCrZr powders. In-situ XRD, together with EDS and EBSD measurements, revealed the formation of two distinct Cu- and Fe-rich FCC phases that co-exist with an Fe-rich BCC phase. From the observed phase morphologies and using thermodynamic calculations, the formation mechanism of the BCC phase is proposed to result from the miscibility gap of the phase diagram, elemental diffusion, and fluid dynamics within the melt pool. The control of the BCC phase content in additive manufacturing is anticipated to be critical for designing complex FCC+BCC “composite” microstructures that can impart substantial strengthening to L-PBF multi-material 316L/Cu structures.