In order to further refine the grains and prepare uniform nanocrystals, the ball milled GZ132K alloy powder was treated by hydrogenation-dismutation-dehydrogenation-recombination(HDDR)technology. By changing temperature, hydrogen pressure and time, the optimum hydrogenation conditions were explored by orthogonal design. Then the optimal dehydrogenated powder was determined by single factor control variables. The phase transformation and microstructure evolution were analyzed by XRD, SEM and TEM, and the HDDR reaction and refinement mechanism were discussed. The results show that the optimal HDDR process parameters of GZ132K powder by ball milling are as follows: Hydrogenation at 400 ℃, 4 MPa hydrogen pressure for 12 h, followed by continuous vacuum dehydrogenation at 450 ℃ for 6 h, the grains are refined from the initial 12~76 nm to 9 nm with more uniform size. It is also found that the HDDR process of ball milling GZ132K powder is actually a combination and decomposition process of Mg and Gd metal hydride.