Development of high temperature thermoelectric materials, like β-FeSi₂, is the need of twenty-first century to convert waste heat energy to electrical energy. The increasing interest in bulk semiconducting iron disilicide, β-FeSi₂, is due to the advantages of its high thermoelectric power, high absorption coefficient (higher than 10⁵ cm^-1 above 1.0 eV) and direct band gap of 0.85 eV. The thermoelectric material is suitable for active component applications such as in light detectors, near-infrared sources, photovoltaic application and optical fiber communication. Powders of pure electrolytic iron and silicon were mechanically alloyed in a Cryo mill for various periods viz. 4, 6 and 8 h. As-milled powders were compacted at 700 MPa and the compacts were then subjected to different heat treatment cycles under vacuum (10^-5 bar). The influence of variation in process parameters like milling period and sintering conditions on phase formation was studied. Traces of β- FeSi₂ phase appeared after Cryo milling for 6 h. The optimized condition to have nearly complete formation of the β-FeSi₂ phase, was found to be the one in which the material was Cryo milled for 6 h which was followed by sintering of compacts at 800 °C for 6 h under vacuum.