Mixtures of pure nanometer-sized amorphous silica and gamma-alumina with the atomic ratio Si:AI = 1 were reduced by a stoichiometric amount of carbon between 1100 and 1450 degrees C in flowing nitrogen in order to produce beta’-sialon powder. Using aqueous suspensions of starting materials, compacts with different microstructures were prepared for reaction. Silica reduction to SiO occurred at a temperature as low as 1300 degrees C and part of it was removed with flowing nitrogen. Carbothermal reaction involving nitrogen stated at 1350 degrees C and Si2N2O was found as an intermediate together with SiC, resulting in beta’-sialon formation. Loss of silica from the system led to AIN formation. Decomposition of beta’-sialon into sialon polytypoids (15R, 12H) was observed as a result of sialon and AIN reaction at 1450 degrees C. The reaction rate of sialon formation was slowed down compared to the carbothermal reduction of kaolin because of the lack of impurities. The microstructure of the reacted pellets influenced the reaction products, and the narrow pore size distribution as well as good homogeneity enhanced beta’-sialon formation.