In the present study, Fe-42% Ni, Fe-2% Y2O3, and Fe-42% Ni-2% Y2O3 (30-60 nm) were prepared by mechanical alloying using high energy SPEX8000M ball mill. Consolidation of the milled sample was done by spark plasma sintering (SPS) at 800, 900, and 1000 °C at a pressure of 60 MPa with a holding period of 5 min in an argon atmosphere. The sintered density was found to be higher at a higher temperature, e.g., 98% at 1000 °C as compared to 78% at 800 °C. The addition of nanosize Y2O3 in Fe or Fe-Ni system showed a strong influence on the formation of intermetallic compounds and final grain size of the resultant material. x-ray diffraction analysis of the sintered Fe-42% Ni-2% Y2O3 alloy indicates the presence of Fe-Ni phase with additional peaks of intermetallic phases (Fe17Y2, Ni5Y) and oxides (Fe3O4, NiO). The nanoindentation hardness of the sintered (at 1000 °C) alloys was found to be the maximum for the Fe-42% Ni-2% Y2O3 (7.9 GPa), followed by Fe-2% Y2O3 (7.2 GPa) and Fe-42% Ni alloy (5.8 GPa). Dry sliding wear resistance of the spark plasma sintered (SPSed) (sintered at 1000 °C) Fe-42% Ni-2% Y2O3 was found to improve due to higher hardness and formation of oxide rich layer at the contact surface. Moreover, the SPSed specimen of the Fe-42% Ni-2% Y2O3 alloy showed a better corrosion resistance (Icorr = 0.78 μA/cm2) as compared to the corrosion resistance (Icorr = 1.34 μA/cm2) of the Fe-42% Ni alloy, both sintered at 1000 °C. The corrosion tests were conducted in a freely aerated 3.5% solution of NaCl electrolyte. A significant amount of grain refinement (due to the addition of nanosize yttria), formation of intermetallic phases (Fe17Y2, Ni5Y) as well as uniform distribution of fine oxide particles (Fe3O4, NiO) played the pivotal role in the improvement of wear, corrosion and mechanical properties of the SPSed Fe-42% Ni-2% Y2O3 alloy. © 2021, ASM International.