Powder metallurgy represents a good alternative to a conventional casting process to produce wear resistant materials. MMC (metal matrix composite) of a hardenable steel matrix and hard phases compacted by hot isostatic pressing (HIP) are highly wear resistant but high in price. In the present study liquid phase sintering was preferred to HIP and expensive hard phases as tungsten carbides were replaced by ferrotitanium particles (FeTi) to reduce costs. A mixture of gas atomized hot work steel powder of < 150 µm in size, hypereutectic FeBC powder of < 36 µm in size as liquid phase donor (LPD) and ferrotitanium particles (100-150 µm in size) with about 70 mass% of Ti was sintered in vacuum to give a wear resistant MMC of full density. However, the elements B and C from LPD diffused to the steel powder before the liquid phase appeared. Therefore these two powders merged into a near-eutectic or hypoeutectic constitution. The LPD was diluted by the steel. During sintering the ferrotitanium particles are transformed in situ into hard phases (in situ HP) with a Fe-rich core surrounded by a hard TiC case to withstand abrasive wear. Numerous investigations by LOM, SEM with EDX, WDX and DTA were realized step by step for a deeper understanding of what happens in the initial three-component mixture during liquid phase sintering and how the in situ MMC forms. The resistance to wear was measured by pin-on-plate tests against abrasive paper of different hardness and mesh size and compared with HIP-MMC and SLPS-MMC.