A new High Frequency Induction Heating (HFIH) process has been developed to fabricate dense $Al_2O_3$ reinforced with Fe-Ni magnetic metal dispersion particles. The process is based on the reduction of metal oxide particles immediately prior to sintering. The synthesized $Al_2O_3$/Fe-Ni nanocomposite powders were formed directly from the selective reduction of metal oxide powders, such as NiO and $Fe_2O_3$. Dense $Al_2O_3$/Fe-Ni nanocomposite was fabricated using the HFIH method with an extremely high heating rate of $2000^{circ}C/min$. Phase identification and microstructure of nanocomposite powders and sintered specimens were determined by X-ray diffraction and SEM and TEM, respectively. Vickers hardness experiment were performed to investigate the mechanical properties of the $Al_2O_3$/Fe-Ni nanocomposite.