This article reports a simple and cost-effective method to prepare ultrafine nanocrystalline MgO/MgAl2O4 spinel (M-MA) powders from industrial wastes arising from aluminium and magnesium scraps. M-MA precursor powders were calcined at different temperatures (650, 750, 850, 950, 1300–1500 °C). The calcined powders were characterized by XRD, FT-IR, DTA, FESEM, and HR-TEM. In particular, ultrafine MgO/MgAl2O3 powder was formed at a temperature of 650 °C with crystallite size of 4.8 nm and 7 nm, respectively, as determined by XRD. Optical properties of the M-MA spinel powders revealed that the optical reflectance is highly dependent on the calcination temperature. A simple and cost-effective method to obtain ultrafine MgO/MgAl2O4 nanocrystalline powders with expected unique properties was established. These synthesized spinel powders is a highly promised feedstock for refractory, ceramic and environmental applications.