The nanocrystalline NiAl intermetallic compound was synthesized by mechanical alloying of the elemental powders. The structural changes of powder particles during mechanical alloying were studied by X-ray diffractometery, scanning electron microscopy and microhardness measurements. The mechanical alloying resulted in the gradual formation of nanocrystalline NiAl with a grain size of 20 nm. It was found that NiAl phase develops by continuous diffusive reaction at Ni/Al layers interfaces. The NiAl compound exhibited high microhardness value of about 1035 Hv.