The present work investigates the effect of cerium oxide addition in the synthesis of nanocrystalline molybdenum carbide by mechanical alloying as part of a project aiming to verify if the milling method can produce a class of materials with catalytic properties. The actual interest is the study of structure development during the milling process and of thermal characteristics of the produced nanocrystalline structure. The structure evolution during synthesis was studied by x-ray diffraction while the temperature effect was investigated by DSC experiments. Results revealed that without cerium oxide addition hexagonal Mo2C nanocrystals of about 10 nanometers size have formed while the presence of cerium has favoured the formation of a metastable phase together with the hexagonal carbide. Results from the thermal analysis were not fully conclusive concerning the thermal stability of the nanocrystalline structure against grain growth but have indicated that cerium addition had decreased the magnitude of the occurring recrystallization while resulting in a less defined transition temperature.