The technique of Self-propagating High-temperature Synthesis (SHS) was used to prepare NiAl from compacts using elemental powder mixtures in stoichiometric amounts under vacuum and argon atmosphere. Considerable changes in the oxygen contents of the specimen before and after the SH-synthesis were not observed. But, unusual occurrence of an impurity phase was noticed in the product as second phase precipitate. The sparsely distributed precipitates could be detected only in the Transmission Electron Microscope and was characterized to be an oxide of aluminium (alpha-Al2O3) containing nickel oxide (NiO), whose solubility in alpha-Al2O3 at room temperature has not been reported earlier. The occurrence of this phase could be traced to the oxygen on the surface of the reactant particles.