A nanoquasicrystalline phase was synthesized by a mechanical alloying process. The thermal stability and oxidation behavior of this phase were investigated in different environments using X-ray diffraction and X-ray photoelectron spectroscopy. The results show that the nanoquasicrystalline phase is stable up to temperatures greater than 1173 K in an inert gas atmosphere, while they are stable up to 873 K in air. The X-ray photoelectron spectroscopy results show three distinct chemical states of Al in Al-Cu-Fe, Al (3+), Al (0) and Al (hydroxide). © 2004 Elsevier B.V. All rights reserved.