Reactive ball milling, using the magneto-mechano-chemical method, was performed on type 304 stainless steel powder in order to investigate structural development and nitrogenation. Experiments were performed in argon, nitrogen and ammonia gases. The allotropic transformation from austenite to ferrite or martensite, which was believed to be stress induced, occurred after milling in all three gases with the reverse transformation occurring after longer milling times. Milling in both nitrogen and ammonia resulted in nitrogenation of the stainless steel powder, in the case of ammonia to higher levels (greater than 7 wt. %) than those achieved using conventional high-pressure-high-temperature diffusion processing. Rapid uptake of N during milling in ammonia is associated with formation of FesN. Annealing of nitrided powders at 1000°C resulted in precipitation of the phases in the following order with increasing nitrogen concentration; β-Cr2N, β-Cr2N+CrN and CrN.