Abstract: In the present work, mechanical alloying of a powder mixture of nickel and graphite (up to 15wt%) was carried out in an attrition mill under a nitrogen atmosphere. The as-milled powders were characterized by scanning electron microscopy (SEM), X-ray diffraction (XRD), and transmission electron microscopy (TEM). The 15wt% graphite dissolved into the nickel (exceeding the negligible solid solubility in the nickel-carbon system), thereby forming a supersaturated solid solution of graphite in a nickel matrix. The dissolved graphite occupied interstitial positions along the dislocation edges and at the grain-boundary regions. A three-step graphite dissolution mechanism has been proposed. The associated changes in the nickel lattice, such as changes in the crystallite size (62 to 43 nm), lattice strain (0.12% to 0.3%), and lattice parameter (0.3533 to 0.3586 nm), which led to the formation of the supersaturated solid solution, were also evaluated and discussed.