The milling and particulate characteristics of Al alloy-$Al_2O_3$ powder mixtures for a reaction-bonded $Al_2O_3$ (RBAO) process were studied. A commercially available prealloyed Al powder with Zn, Mg, Cu and Cr alloying elements (7475 series) was mixed with a calcined sinter-active $Al_2O_3$ powder and then milled in centrifugal milling equipment for ~48 hrs. The Al alloy-$Al_2O_3$ powder mixtures after milling were characterized and evaluated in various ways to reveal their particulate characteristics during milling. The milling efficiency of the Al alloy increased with a longer milling time. Comminution of the Al alloy particles started with its elongation, showing a high aspect ratio. With a longer milling time, the elongated Al alloy particle changed in terms of its shape and size, becoming equiaxially fine particles. Regardless of the milling efficiency of the Al alloy particles, all of the Al alloy particles repeatedly experienced strong plastic deformation during milling, giving rise to higher density of surface defects, such as microcracks, and leading to higher residual microstress within the Al alloy particles. The chemical reactions, oxidation behavior and hydration behavior of the Al alloy particles and the hydrolysis characteristics of their reaction with the environment were also observed during the milling process and during the subsequent powder handling steps.