Ti70.5Fe29.5 alloy is synthesized using laser-induced self-propagating reaction synthesis (LSRS). The product mainly consists of beta-Ti + TiFe eutectic. However, a given amount of oxygen-stabilized Ti2Fe phase is also found in the product due to high cooling rate and oxygen existence. The formation of the fine eutectic structure makes the alloy exhibit high hardness (9.34 GPa), high compressive strength (2609 MPa), and good relative compressibility (8.5%). The phase formation during LSRS can be divided into four stages: melting of Fe particle periphery, formation of a liquid-state Ti-Fe diffusion layer, eutectic reaction, and formation of oxygen-stabilized Ti2Fe phase.