The synthesis of NiTi alloy powders by hydrogen reduction and dehydrogenation process of NiO and TiH2 powder mixtures is investigated. Mixtures of NiO and TiH2 powders are prepared by simple mixing for 1 h or ball milling for 24 h. Simple-mixed mixture shows that fine NiO particles are homogeneously coated on the surface of TiH2 powders, whereas ball milled one exhibits the morphology with mixing of fine NiO and TiH2 particles. Thermogravimetric analysis in hydrogen atmosphere reveals that the NiO and TiH2 phase are changed to metallic Ni and Ti in the temperature range of 260 to 290oC and 553 to 639oC, respectively. In the simple-mixed powders by heat-up to 700oC, agglomerates with solid particles and solidified liquid phase are observed, and the size of agglomerates is increased at 1000oC. From the XRD analysis, the presence of liquid phase is explained by the formation and melting of NiTi2 intermetallic compound due to an exothermic reaction between Ni and Ti. The simple-mixed powders, heated to 1000oC, lead to the formation of NiTi phase but additional Ni-, Ti-rich and Ti-oxide phases. In contrast, the microstructure of ball-milled powders is characterized by the neck-grown particles, forming Ni3Ti, Ti-oxide and unreacted Ni phase.