Al₆₅Cu₂₀Fe₁₅ is a thermodynamically stable quasicrystal. There are two kinds of quasicrystal present in such a material: 3D quasicrystal-icosahedral (I phase) and 2D quasicrystal-decagonal (D phase). The I phase is dominant in rapidly quenched samples and exhibits Pauli paramagnetism. For annealed samples, however, the D phase becomes dominant and exhibits diamagnetism. Macrostructural transitions from the I phase to the D phase during annealing were observed by SEM. The results of UPS experiments show a gradual increase in Fermi energy implying that the unfilled energy level of Fe is being filled by conduction electrons during such a structural transition. This causes the magnetism to change from Pauli paramagnetism to diamagnetism.