Metal-ceramic microstructures were formed in situ by the partial reduction (i.e. the reduction of only one of the metallic elements) of the spinel compound NiAl2O4. Depending on reduction conditions, these microstructures consist of Ni particles embedded in an alpha-Al2O3 or a multiphase matrix called 'defect spinel'. The volume shrinkage that accompanies the reaction generates residual stresses which profoundly affect the microstructure evolution. Conversely, formation of metastable, intermediate phases, generation of porosity and cracking are all observed and may act to relax the residual stresses. Electron microscopy observations as well as both neutron and X-ray diffraction residual stress measurements are used to study the influence of residual stresses on the microstructure evolution during the reduction process. (C) 1997 Elsevier Science S.A.