Toward designing a cost-effective advanced powder metallurgy approach, we present a new insight into the efficient utilization of titanium hydride powder, together with pure Ti powder, to prepare high-strength β-titanium alloys. In the present work, Ti-40 mass% Nb alloy was prepared by mechanical alloying of a mixture of pure Ti, titanium hydride, and Nb elemental powders, followed by a carefully designed two-step spark plasma sintering. The role of relative amounts of titanium hydride and pure Ti powders during mechanical alloying, and their effect on the microstructural and mechanical properties of the Ti-40Nb alloy, have been discussed and elaborated. An increasing amount of titanium hydride results in higher powder yield and smaller resultant powder particle size. Subsequent two-step spark plasma sintering resulted in equiaxed microstructure with primarily β phase, wherein the grain size decreased with increasing amounts of titanium hydride powder. The specimen corresponding to alloys prepared using equal amounts of pure Ti and titanium hydride powders resulted in fine-grained structure, exhibiting the best combination of mechanical properties, that is, a combination of highest hardness, high strength, and high ductility.