Reactive milling of nickel oxide and aluminium powders corresponding to the stoichiometric reaction 3NiO + 5Al resulted in the formation of intermetallic matrix composite NiAl-Al2O3, with 28 wt% of alumina. Prolongation of the milling process allowed obtaining the microstructure with nanosize range of crystallites of both phases, as showed XRD measurements and TEM observations. The refinement of microstructure was accompanied with an increase of lattice strain as a result of ball milling. The particles size and morphology changed from several tens of micrometers and polyhedron shape observed immediately after the reaction took place, to several micrometers and spherulitic shape after long-term milling. Two consolidation techniques of nanocomposite powders were applied: explosive compaction and hot-pressing under high pressure. Both methods allowed obtaining the samples of high density (up to 99% of theoretical one) and microhardness above 13 GPa. Simultaneously, a nanocrystalline structure of the material was preserved. (C) 2004 Kluwer Academic Publishers.