Indium oxide-doped hematite xIn(2)O(3)center dot(1 - x)alpha-Fe2O3 (x = 0.1-0.7) nanostructure system was synthesized using mechanochemical activation by ball milling and characterized by XRD, simultaneous DSC-TGA, and UV/Vis/NIR. The microstructure and thermal behavior of as obtained system were dependent on the starting In2O3 molar concentration x and ball milling time. XRD patterns yielded the dependence of lattice parameters and grain size as a function of ball milling time. After 12 h of ball milling, the completion of In3+ substitution of Fe3+ in hematite lattice occurs for x = 0.1, indicating that the solid solubility of In2O3 in hematite lattice is extended. For x = 0.3, 0.5, and 0.7, the substitutions between In3+ and Fe3+ into hematite and In2O3 lattice occur simultaneously. The lattice parameters a and c of hematite and lattice parameter a of indium oxide vary as a function of ball milling time. The changes of these parameters are due to ion substitutions between In3+ and Fe3+ and the decrease in the grain sizes. Ball milling has a strong effect on the thermal behavior and band gap energy of the as-obtained system. The hematite decomposition is enhanced due to the smaller hematite grain size. The crystallization of hematite and In2O3 was suppressed, with drops of enthalpy values due to the stronger solid-solid interactions after ball milling, which caused gradual In3+-Fe3+ substitution in hematite/In2O3 lattices. The band gap for hematite shifts to higher energy value, while that of indium oxide shifts to lower energy value after ball milling.