Mechanical alloying (MA) of iron and graphite was performed for C-10 at%Fe alloy by the use of a conventional ball mill. The structure of mechanically alloyed samples were examined by X-ray diffraction, transmission electron microscopy. A spectrometric approach to the change of structure during the milling process was carried out by carbon Kα X-ray-emission band spectroscopy and electron energy loss spectroscopy. Finely dispersed iron particles with a grain size of about 10 nm into graphite powder particles were obtained after 1000 h of MA. Spectrometric results suggested that fracturing of graphite of graphite crystal progressed by three steps; fracturing along the hexagonal plane, fracturing the hexagonal networks and amorphization. The electron state of carbon atom in the ball milled sample was energized to form sp³ hybrid orbital, after applying pressuring.