In this work, preparation of (Ni, Fe) 3 Al-Al 2 O 3 nanocomposite powders by mechanochemical reaction of Ni, Al, and Fe 2 O 3 powder mixture was reported. The phase transformation and microstructural characterization during mechanochemical reaction were investigated by X-ray diffractometry (XRD), scanning electron microscopy (SEM), and differential thermal analysis (DTA) techniques. The (Ni, Fe) 3 Al-20 vol% Al 2 O 3 nanocomposite can be synthesized by mechanochemical reaction during ball milling of a stoichiometric starting powder mixture, and hence reaction 4Ni þ 4Al þ Fe 2 O 3 took place after 40 h of milling with a gradual mode. Increasing Ni concentration concurrently with decreasing Fe 2 O 3 concentration decreased the start time of (Ni, Fe) 3 Al formation. The formation mechanism of reaction between starting powder mixture and the effect of milling on this reaction were confirmed by using DTA and XRD.