Powder mixture of Fe, Al and mill scale Fe power (24.5 mass% 0) was milled for certain period. Powders were mixed to become the composition of Fe-40mol%Al + 0, 2.5, 5.0, 7.5, 10.0 vol% Al2O3 after mechanochemical reaction. Longer time milling over 1080ks, FeAl phase newly formed only by MA. Al acts as a reducing agent for Fe oxide (mill scale powder) and then synthesizes Al2O3. The mill scale powder affected the MA process and phase formation behavior. Almost full density compacts were obtained by vacuum hot pressing under the condition of 1273K-150MPa-7.2ks, and those become FeAl intermetallic compound. Compacts, made with adding high weight percent of mill scale powder, showed higher hardness compared with the case of FeAl monolithic compact. This is presumably resulting from the effect of dispersed Al2O3 introduced by mechanochemical reaction during MA and later consolidation process.