Mo-10 at.% Cu nanocomposite powders were fabricated by using planetary ball-milling (PBM), a mechanical alloying technique for preparing nanocomposite alloy powders of metals with mutual insolubility, and the variations in the physical and the chemical characteristics with the process conditions were investigated. We observed that Mo-10 at.% Cu was an appropriate composition to ensure a good alloying grade and minimal welding between particles. The influences of the temperature and the milling conditions on the mechanical alloying process and the phase change of Mo-10 at.% Cu composite powders were investigated, and the particle and the grain sizes of the powders after mechanical alloying were confirmed. The Mo-10 at.% Cu powders showed homogeneous elemental distributions and no phase changes up to 1200 °C; their compositions were retained after the mechanical alloying process. The finest grain size obtained was about 5 nm for powders processed using optimum PBM processing conditions: ball-to-powder weight ratio of 5: 1, ambient air atmosphere, a milling time of 20 h, a rotation speed of 200 rpm, and a stearic acid content of 4 wt.% produced superfine-grained Mo-10 at.% Cu nanocomposite powders with an average grain size of 5 nm (which is smaller than that of other similar materials reported in the literature). The analytical results confirmed that the PBM technique presented here is a promising method for preparing superfine-grained Mo-10 at.% Cu powders with improved properties.