Powder metallurgical Ti-5Al-2.5Sn ELI (extra low interstitial) alloy was prepared in a container by hot isostatic pressing (HIP). The effects of HIP temperature, particle size of powders and heat treatment temperature on the microstructure have been investigated. Particle morphology would be observed in the powder compact sample, with its relative density of 99.2% at the holding temperature of 800 °C. Within the temperature ranging from 900 to 940 °C, the microstructure has developed into fully dense and fine equiaxed grains. When the sample is compacted in α phase region, significant diffusion of Fe can be hardly observed at the boundary of the container and the compact; in α+β or β phase region, fast diffusion of Fe in β phase may do harm to surface quality of the powder compact. The mean grain size and the residual porosity of PM alloy increase with the increase of powders’ particle size. There is no obvious change in the microstructure of PM alloy after heat treatment in α phase region. Temperature induced porosity doesn’t appear until the heat treatment temperature rises up to 1000 °C.