Mullite is one of the most important ceramics that show high temperature strength and corrosion property with a good creep resistance. However the application of mullite is limited by low sinterability, formation at high temperature and low ductility. One of the methods for improving physical and mechanical property of mullite is composite formation with Zirconia. This composite is often produced by reaction sintering that needs to high temperature and time. The aim of this project was synthesis and characterization of Mullite-zirconia composite by mechanical activation. The material used in this study was calcin alumina, reactive alumina, zircon, Ammonium fluoride and ammonium chloride. Ammonium fluoride and ammonium chloride were used as materials for improving the reaction. As-received materials were mixed according to stochiometric ratio and then heattreated to form Mullite-zirconia composite. The effect of activation time, heat treatment temperature and using of ammonium fluoride and ammonium chloride on the phase transformation and crystallite size of the composite were investigated. X-Ray Diffraction (XRD) were used to detect the phase transformation during mechanical activation and heat treatment. Scanning Electron Microscope was used to study the microstructure and morphology of powders and compact samples. EDX was also used to detect the elemental change in different phases. The result showed that without the presence of F and Cl ions, the Mullite-zirconia nanocomposite was successfully synthesized with a crystallite size of 35nm after 40h of mechanical activation and 4h heat treatment of calcinate alumina and zircon at 1400 0 C. Also this nanocomposite was synthesized by mechanical activation and 4h heat treatment of reactive alumina and zircon at 1400 0 C but with remained zircon. The presence of F and Cl ions were caused to reduction of formation time. But the crystallite size of synthesised composite was increased due to the change in formation mechanism. in the presence of ammonium fluoride Mullite zirconia nanocomposite was synthesized with a crystallite size of 65nm after 20h mechanical activation of calcinate alumina and ziron and 4h heat treatment at 1400 C. Also in the presence of ammonium chloride Mullite zirconia nanocomposite was synthesized after 20h mechanical activation of calcinate alumina and ziron and 4h heat treatment at 1400 C but with some not-reacted alumina. Key words Mullite, Nanocomposite, Zirconia, Mechanical activation.