Elemental mixtures of Al, Cu, Fe powders with the nominal composition of Al₇₀Cu₂₀Fe₁₀ were mechanically alloyed in a planetary ball mill for 80 h. Subsequent annealing of the as-milled powders were performed at 600–800°C temperature range for 4 h. Structural characteristics of the mechanically alloyed $Al$_{70}Cu₂₀Fe₁₀ powders with the milling time and the heat treatment were investigated by X-ray diffraction (XRD), differential scanning calorimeter (DSC) and differential thermal analysis (DTA). Mechanical alloying of the Al₇₀Cu₂₀Fe₁₀ did not result in the formation of icosahedral quasicrystalline phase (i-phase) and a long time milling resulted in the formation of 𝛽-Al(Cu,Fe) solid solution phase (𝛽-phase). The i-phase was observed only for short-time milled powders after heat treatment above 600°C. The 𝛽-phase was one of the major phases in the Al₇₀Cu₂₀Fe₁₀ alloy. The w-Al₇Cu₂Fe₁ phase (w-phase) was obtained only after heat treatment of the short-time milled and unmilled samples. The present investigation indicated that a suitable technique to obtain a large amount of quasicrystalline powders is to use a combination of short-time milling and subsequent annealing.