A nanocomposite material fabricated by hot pressing in the form of nanometre-sized Si3N4 particles dispersed in an Al2O3 matrix has been shown to exhibit enhanced mechanical properties compared with monolithic matrix material. It was observed by transmission electron microscopy (TEM) for the first time that the alumina grains were in the shape of elongated columns with aspect ratios in the range 2.5-4. The presence of liquid phase during sintering was found to be responsible for the appearance of columnar grains. Regular hexagon-shaped larger beta’-Sialon grains formed during sintering were mainly situated at grain boundaries of the matrix material while irregular smaller dispersoids were trapped within the alumina grains. The improvement in the mechanical properties of the nanocomposite is attributed to the change in fracture mode from intergranular fracture to transgranular fracture, the "self-reinforcement effect" a rising from the elongated columnar grains of the matrix, as well as the "pinning effect" due to the existence of intergranular beta’-sialon particles. It was revealed that the trapped particles have an alpha-Al2O3 structure with partial sites of aluminium and oxygen atoms substituted by silicon and nitrogen atoms, which is also likely to lead to the strengthening of the composite.