Fe-Ni ultra-fine particles were prepared by mechanical alloying and phase transformation during mechanical alloying was studied. Results show that phase transformation tendency is different during mechanical alloying of Fe-Ni powders with different nickel content. For Fe-30Ni powder, martensite is the only product obtained with the increase of milling time, while for Fe-35Ni powder, a part of martensite has been transformed into austenite when milling time is prolonged to above 40 h. It indicates that the nickel content plays an important role in the phase transformation tendency during mechanical alloying of Fe-Ni powders.