Mechanically alloyed powders with the composition Al0.7Li0.3 are synthesized. Materials milled for different times are studied using electron microscopy, x-ray diffraction, and thermal analysis. A solid solution of Li in Al (α-phase) is formed with as much as 10 at % of dissolved Li. The LiAl intermetallic δ-phase is readily produced by mechanical alloying but disappears after extended milling times. The final product of milling for 102 hours consists of an x-ray amorphous phase. Mechanically alloyed powders heated in inert environment exhibit several weak exothermic reactions between 420 and 700 K, and two endothermic reactions, around 810 and 870 K. All the observed relaxation processes become less pronounced and eventually become undetectable as the milling time increases and an amorphous material is produced. Ignition experiments performed for the powders coated on an electrically heated filament showed that the powders ignited in the vicinity of 1250 K. An experimental setup for studying combustion of reactive mechanically alloyed powders is developed and initial experimental results are described.