Nano-structured metal (Zn, Mg, Ca) aluminate, with spinel structure, dispersed in SiO2 glassy matrix materials are found to exhibit improved properties such as great thermal stability, hardness, etc. and find important applications in optical, refectories, high alumina cement oxidation catalysts, etc. The preparation of such materials can be obtained by controlling both the size and polydispersity of the particles in the host matrix through special synthesis methods like sol-gel, solid state reaction, etc. Sol-gel technique is a low temperature process and has high chemical homogeneity and purity. Synthesis of nano-crystals of spinel structure NiAl2O4 dispersed in SiO2 glassy matrix has been demonstrated through insitu reaction sol-gel method. The precursor chemicals used are tetraethylorthosilicate (TEOS), Al(NO3)3.9H2O and NiNO3. The precursors are mixed, according to their respective molecular weight percentages, water is added to TEOS and the solution is stirred for 2 hrs at 338 K and then allowed to form gel at same temperature. The xerogel is heat treated till the nucleation and growth of of NiAl2O4 crystals appear.