The nanocrystalline powders of Tb4O7-18%TiO2 (mass%)were prepared by high energy ball milling. Systematical investigations were carried out on microstructure、grain size、lattice distortion and morphology of the Tb4O7-18%TiO2 milled powders using Laser Particle Analyzer, X-ray diffraction, transmission electron microscopy and scanning electron microscopy. The experiment results showed that the nanocrystalline and nanoparticle powders were synthesized and microstructure was homogeneous.With the increase of ball milling time, the diffraction peaks of Tb4O7 phase broadened gradually and moved to large angles. Meanwhile, the diffraction peaks of TiO2 phase weakened gradually and disappeared after 4h milling. At the initial stage of ball milling, both particle size and crystalline size reduced significantly, then the size reduced slowly and tended to a stable value on the late stage of ball milling. After 96h milling, the average of particle size and crystalline size was 200nm and 95nm respectively. The lattice distortion was up to 1.35%. The reason of solid solution and nanocrystalline formation and the mechanism of microstructure evolution were also discussed in the present work.