Nanocrystalline indium tin oxide (ITO) powders were prepared by a novel spray combustion method. Using single-drop study equipment, we studied the thermodynamics of the combustion reaction. The reaction can be ignited at air temperature as lower as 171.3 degrees C when using urea and glucose as composite fuel. Once the reaction is ignited, the combustion temperature can surge to above 500 degrees C, generating nanocrystalline ITO powders with grain size about 40 nm. Footages from high-speed camera demonstrated that the reaction is in three-step: moderate beginning, violent middle, and decaying end. It is also noticed that the ignition is very sensitive to the air temperature, even 0.2 degrees C minus deviation may fail the combustion. The combustion reaction is self-sustainable, which saves the energy supply. And the low ignition temperature means the combustion reaction can be carried out in a conventional spray dryer. Our results provide a feasible way to mass production of nanocrystalline ITO powders, which as a methodology, may be extended to the production of other oxide nanopowders.