Nickel alloy powders with additions of Gd2O3 and Ti were mechanically alloyed (MA) using a high-energy ball mill. The formation behaviors of nanoparticles in nickel-based MA powders were investigated using in situ characterization methods, including high-temperature X-ray diffraction and in situ transmission electron microscope (TEM). The added Gd2O3 particles were dissolved into the matrix during MA process. Recrystallization of the MA powders occurred between 810 and 880 degrees C, followed by grain growth. Precipitation of nanoparticles was observed after grain growth using in situ TEM and was attributed to the reduced dislocations and grain boundary area. More importantly, these nanoparticles were dissolved into matrix after the specimen was reheated to a higher temperature of 1014 degrees C. During subsequent cooling, Gd2TiO5 particles were re-precipitated in a more uniform way, including smaller average size of 6.8 nm and reduced interparticle spacing of 26.9 nm.