It is possible on thermodynamics to prepare TiAl alloy in CaH2-TiO2-Al system by Reduction-Diffusion method. It is a first-class reaction, whose mechanism was discussed by liquid-solid contracting core model. Results show that TiO2 is reduced to Ti rapidly, which is not the rate-controlling step of the reaction. The interfacial chemical reaction is the rate-controlling step of the reaction. The apparent activation energy of the reduction-diffusion reaction is 76.84 kJ/mol. There is sufficient reaction when the entering quantity of CaH2 is 1.5 times of theoretic quantity. Al powder granularity doesn’t influence the reaction. The transformation efficiency of TiAl alloy is about 100% when the reaction temperature is 1423 K and the reaction time is 8 h.