The NiAl/Al2O3–TiC composite was fabricated by the combustion synthesis of NiO/Al/Ti/C powder starting mixture. The effects of mechanical activation on phase formation and microstructure development were evaluated by X-ray diffraction, scanning electron microscopy using energy dispersive spectroscopy, and transmission electron microscopy. By the combustion synthesis of an as-mixed powder compact, a partial amount of NiO was reduced by molten aluminum with the formation of NiAl3 and Al2O3. Mechanical activation refined the particle size of the reactants and after combustion synthesis, Ni was reduced by the reaction of NiO/Al with molten Al giving rise to NiAl. NiAl formation is an exothermic reaction whose released energy starts the ignition resulting in the final NiAl/Al2O3–TiC composite.