The production of metal–ceramic nanodispersion by mechanical milling of powders through the displacement reaction Fe2O3+M→Fe+M-oxide (with M: Al, Ti) was studied. The reaction progress with milling time was followed by recording the temperature and pressure during the process. The samples were characterized by X-ray diffraction and Mossbauer spectroscopy at the intermediate and final stages. In both cases self-sustained reactions were observed with different activation times. The results confirm that mechanical work at room temperature yields the reduction of hematite by Ti and Al. The final oxides were identified as Ti2O3 and Al2O3, respectively. The dependence of the intermediate and final stages on the milling conditions and the starting composition will be discussed.