Elemental powder mixtures of Fe and Si were mechanically alloyed with a ball-mill. Mossbauer spectroscopy and X-ray diffraction were used to characterise the microstructural changes of these mixtures which are induced by high-energy ball-milling. Mossbauer spectra are discussed in terms of two main spectral components (corresponding to FeSi alloy and alpha-Fe) and the time dependence of the alloy formation follows a Johnson-Mehl type law. Calorimetry measurements show that the formed alloy is stable up to 800 degrees C as no crystallisation or phase transformation peaks are observed. From X-ray diffraction, a crystallite size of 9 nm is obtained. Magnetic measurements at low temperature were carried out on the final alloy and the saturation magnetic moment at 4.2K is 0.44 mu(B)/Fe.