TiN/Al2O3 functionally graded composite was fabricated by in-situ aluminothermic reduction of TiO2 in coke bed from mixtures of TiO2 powder and metal Al powder. The reaction process, phase composition, and microstructure of sample treated at 1500°C for 3h were analyzed by XRD, SEM and EPMA. The results indicated that the thermite reduction of TiO2 involves several transitional stages and its initial reaction temperature is lowered by prior reaction between Al and TiO2. EPMA analysis showed that the TiN/Al2O3 ratio in TiN/Al2O3 functionally graded material products changes gradually across the samples without distinct interface between the different layers. The microstructure of the composite changes gradually, and the size of TiN grains increases from the verge region of samples to the centre of samples. These results above were in agreement with thermodynamic analysis.