In this research, Synthesis of nanocrystalline NiTi powder and NiTi/?-Al 2 O 3 nanocomposite with 10 and 20 weight percent Al 2 O 3 by mechanical alloying (MA) in a planetary ball mill under argon atmosphere were investigated. The structural evaluation of powders was studied by X-ray diffraction (XRD), scanning electron microscopy (SEM), transmission electron microscopy (TEM), differential scanning calorimetry (DSC) and microhardness measurements. Thermodynamic and kinetic analyses of the process were carried out using Miedema model and Coats-Redfern method respectively. The results showed that MA of Ni 50 Ti 50 leads to the formation of nanocrystalline B2-NiTi. At the early stages of MA, a lamellar structure of components is formed with the dissolution of Ti in Ni at the same time. With the progress of MA, the resulting supersaturated solid solution becomes non-stoichiometric and finally disordered stoichiometric NiTi with nanometeric grain size is formed. Annealing of the milled powder leads to increase in long range order to 0.94 and formation of small amounts of NiTi 2 and Ni 3 Ti phases. Thermodynamic analysis in this system revealed that the MA product of Ni 50 Ti 50 is the phase with the most negative Gi free energy change amongst competing phases at the considered composition. The results also showed that NiTi/Al 2 O 3 nanocomposite can not be synthesized by MA of powder mixture of Ni-Ti-Al 2 O 3 in a steel cup, but MA of a powder mixture containing NiO-Al-Ti-Ni and mechanochemical reduction of NiO by Al showed that nanometric Al 2 O 3 particles can be dispersed in nanocrysatalline NiTi matrix. Nanocomposite formation mechanism depends on Al 2 O 3 weight percent. It is diffusion controlled for NiTi-10wt.%Al 2 O 3 and self-propagating combustion for NiTi-20wt.%Al 2 O 3 . The presence of Al 2 O 3 dispersoids in the NiTi matrix leads to increase of hardness and decrease of grain growth and ordering degree and finally high thermal stability of NiTi during annealing. Kinetic analysis showed that NiO-Al reaction has a chemical controlled mechanism in contracting cylinder model with 490 kJ activation energy. MA caused kinetic model change to contracting sphere and activation energy decrease to 397 kJ.