The atomic structure of Al-5 wt.%Mn (Al-5Mn) alloy, prepared by rapid solidification, and pre-annealed at 623 and 773 K for 5 and 1 h, respectively, were characterized by X-ray powder diffraction (XRD) and extended X-ray absorption fine structure (XAFS) techniques. The sample in as-quenched stage was found crystalline, consisting of metastable alpha-Al (Al-Mn solid solution) and icosahedral quasicrystalline I-Al6Mn phases. Five hours annealing at 623 K proved thermal stability of both the phases. Pre-annealing at 773 K/1 h on the other hand leads to alpha-Al phase decomposition and structural transformation of metastable I-Al6Mn to stable orthorhombic Al6Mn phase. The EXAFS results indicate that Mn atoms are located preferably on the outer shell of icosahedrons. During the I-Al6Mn -> omicron-Al6Mn transformation the total Al atoms coordinating one Mn were found to be constant (similar to 10). Based on the results, only distance/symmetry changes in atomic arrangement around Mn atoms were suggested.