In situ electron diffraction was used to study structural transformations during the formation of Co-In 2 O 3 ferromagnetic nanocomposite thin films in a thermite reaction of In/Co 3 O 4 bilayer thin films. Heating was performed from room temperature to 600°C at a rate of 4°C/min, while simultaneously electron diffraction patterns were recorded at a speed of 4 frames/min. This made it possible to determine the initiation, 185°C, and finishing, 550°C, temperatures of the solid-state synthesis, as well as the change in the phase composition during the thermite reaction. The synthesized Co-In 2 O 3 film nanocomposite contained ferromagnetic cobalt nanoclusters surrounded by an In 2 O 3 layer, with an average size of 20 nm, and had a magnetization of 400 emu/cm 3 and a coercivity of 50 Oe at room temperature. The estimate of the effective interdiffusion coefficient of the reaction suggests that the main mechanism for the formation of the Co-In 2 O 3 nanocomposite is diffusion along the grain boundaries and dislocations.