Mechanical treatment of Fe2O3, Al and Fe powder mixtures was carried out in a high energy ball mill to synthesize Fe3Al-Al2O3 intermetallic matrix nanocomposite. Different compositions including 3Fe + Al, Fe2O3 + 2Al, 3Fe(2)O(3) + 8Al and Fe2O3 + 3Al+Fe were chosen in this study. Phase development and structural changes occurring during ball milling were investigated by X-ray diffractometry (XRD) and scanning electron microscopy (SEM). The results showed that during MA, Fe2O3, Al, and Fe react to give a nanocrystalline Fe3Al intermetallic compound matrix. The presence of pure Fe in initial powder mixture changed the modality of mechanochemical process from sudden to gradual reaction. The Fe3Al-Al2O3 compound had a finer microstructure and particles size compared to the Fe3Al compound.