The mechanism of structure formation of the global reaction Fe2O3 + 2Al --> 2Fe + Al2O3 under self-propagating high-temperature synthesis (SHS) conditions in the presence of alumina as diluent is investigated. The reactants in powder form are converted into products by passing through four transformation zones with different structure and composition. Some of the early stages of this reaction are explained on the basis of the mechanism proposed by Korchagin and Podergin (1979). Final products seem to be then formed as a consequence of a crystallization process from a melt. These findings may contribute to improve the manufacturing of wear and corrosion resistant SHS coatings.