Ni(Fe)Al powders containing a homogeneous distribution of the in-situ formed AIN and $Al_2O_3$ dispersoids have been produced by mechanical alloying process in a controlled atmosphere using high energy attrition mill. The powders have been successfully consolidated by hot extrusion process. The phase information investigated by TEM and XRD analysis reveals that Fe can be soluble up to 20% to the NiAl phase ($eta$) at room temperature after MA process. Subsequent thermomechanical treatment under specific condition has been tried to induce secondary recrystallization (SRx) to improve high temperature properties, however, the clear evidence of SRx was not obtained in this material. Mechanical properties in term of strength at room temperature as well as at high temperatures have been improved by the addition pf AIN, and the room temperature ductility has been shown to be improved after heat treatment, presumably due to the precipitation of second phase of $alpha$ in this material.