The nanoalumina particles were produced by the wire explosion process. The size and the shape of the particles were measured using Transmission Electron Microscope (TEM) studies. The Scanning Electron Microscope (SEM) studies were carried out to confirm that the particles are of sub-micron size. The compositions of the material were characterized through the Energy Dispersive Angle X-ray Analysis (EDAX) results. The Wide Angle X-ray Diffraction (WAXD) and the Fourier Transform Infra-Red (FTIR) results confirmed the nanosize powder formed by the process as crystalline γ-Al2O3 powder. The thermal characteristics were analyzed using Thermo-gravimetric Differential thermal analysis (TG-DTA). It is identified that the local temperature of the medium at the time of formation of nanopowder decides the phase characteristics of the powder material. The formation mechanism of nanopowder by wire explosion technique was explained in detail. The mechanism of nanopowder formation and the characteristic changes that occur during the explosion process were recorded using a high-speed digital camera. © World Scientific Publishing Company.