The microstructural evolution, thermodynamics and kinetics of Mo-21%Tm₂O₃ (mass fraction, %) powder mixtures during ball milling were investigated using X-ray diffraction and transmission electron microscopy. Ball milling induced Tm₂O₃ to be decomposed and then dissolved into Mo crystal. The supersaturated nanocrystalline solid solution of Mo (Tm, O) was obtained after 96 h of ball milling. The elements of Mo, Tm and O were distributed uniformly in the ball-milled particles. Based on the semi-experimental theory of Miedema, a thermodynamic model was developed to calculate the driving force of phase evolution. There was no chemical driving force to form a crystal solid solution of Tm atoms in Mo crystal or an amorphous phase because the Gibbs free energy for both processes was higher than zero. For Mo-21%Tm₂O₃, it was mechanical work, not negative heat of mixing, that provided the driving force to form supersaturated nanocrystalline Mo (Tm, O) solid solution.