Elemental mixtures of Al, Cu, Fe powders with the nominal composition of Al70Cu20Fe10 were mechanically alloyed in a planetary ball mill for 80 h. Subsequent annealing of the as-milled powders were performed at 600-800 degrees C temperature range for 4 h. Structural characteristics of the mechanically alloyed Al70Cu20Fe10 powders with the milling time and the heat treatment were investigated by X-ray diffraction (XRD), differential scanning calorimeter (DSC) and differential thermal analysis (DTA). Mechanical alloying of the Al70Cu20Fe10 did not result in the formation of icosahedral quasicrystalline phase (i-phase) and a long time milling resulted in the formation of beta-Al(Cu,Fe) solid solution phase (beta-phase). The i-phase was observed only for short-time milled powders after heat treatment above 600 degrees C. The beta-phase was one of the major phases in the Al70Cu20Fe10 alloy. The w-Al7Cu2Fe1 phase (w-phase) was obtained only after heat treatment of the short-time milled and unmilled samples. The present investigation indicated that a suitable technique to obtain a large amount of quasicrystalline powders is to use a combination of short-time milling and subsequent annealing.