Nanocomposite formation of metal-metal oxide systems by mechanical alloying (MA) has been investigated at room temperature. The systems we chose are the Fe2O3-M (M=AI,Ti,Zn.Cu), where pure metals are used as reducing agent. It is found that nanocomposite powders in which Al2O3 and TiO2 are dispersed in Fe matrix with nano-sized grains are obtained by mechanical alloying Fe2O3 with Al and Ti, respectively. However, the reduction of Fe2O3 with Cu by MA is not occurred. And the system of Fe2O3-Zn results in the formation of FeO plus ZnO after 120 h. of milling. It is also shown that the magnetic evidence for the solid state reduction by mechanical alloying through changes in saturation magnetization and coercivity.