Nanocrystalline and polycrystalline TiFe0.25Ni0.75 alloys were prepared by mechanical alloying (MA) followed by annealing and arc melting method, respectively. The amorphous phase of MA samples forms directly from the starting mixture of the elements, without other phase formation. Heating the MA powders at 750 °C for 0.5 h resulted in the creation of CsCl-type nanocrystalline compound with mean crystallite size of about 50 nm. The substitution of Fe in TiFe by Ni leads to significant modifications of the electronic structure of the polycrystalline sample. On the other hand, the XPS valence band of the MA nanocrystalline TiFe0.25Ni0.75 alloy is considerably broader compared to that measured for the polycrystalline sample. The strong modifications of the electronic structure in the nanocrystalline TiFe0.25Ni0.75 alloy could significantly influence its hydrogenation properties.