This paper presents an efficient sharp interface model to study the morphological transformations of misfit particles in phase separated alloys. Both the elastic anisotropy and interfacial energy are considered. The geometry of the material interface is implicitly described by the level set method so that the complex morphological transformation of microstructures can be accurately captured. A smoothed extended finite element method is adopted to evaluate the elastic field without requiring remeshing. The equilibrium morphologies of particles are shown to depend on the elastic anisotropy, interfacial energy as well as the particle size. Various morphological transformations, such as shape changes from spheres to cuboids, directional aligned platelets and particle splitting, are observed. The simulated results are in good agreement with experimental observations. The proposed model provides a useful tool in understanding the morphological transformation of precipitates, which will facilitate the analysis and design of metallic alloys.