In this Study, FeNi-Al2O3 nanocomposites with three different compositions were successfully synthesized through mechanical alloying of Fe2O3, Ni and Al powders mixture. Characterization of the products was accomplished by scanning electron microscopy (SEM), energy dispersive X-ray spectroscopy (EDX) and X-ray diffraction (XRD). The effect of various parameters such as chemical composition of starting materials, milling time and annealing on the phase evolution, morphology and microhardness of samples was investigated. It was found that FeNi matrix nanocomposites reinforced with 10, 15 and 30wt.% of Al2O3 were fabricated in 300, 240 and 180 min of milling, respectively. The crystallite size of the intermetallic FeNi phase and particle size of Al2O3 in the 720 min milled FeNi-30wt.%Al2O3 nanocomposite sample were calculated 28nm and 5.15 µm, respectively. Microhardness results also showed the same sample had the maximum hardness value of 790 HV.