Nanocrystalline indium tin oxide (ITO) powders were prepared by a novel spray combustion method. Using single-drop study equipment, we studied the thermodynamics of the combustion reaction. The reaction can be ignited at air temperature as lower as 171.3°C when using urea and glucose as composite fuel. Once the reaction is ignited, the combustion temperature can surge to above 500°C, generating nanocrystalline ITO powders with grain size about 40 nm. Footages from high-speed camera demonstrated that the reaction is in three-step: moderate beginning, violent middle, and decaying end. It is also noticed that the ignition is very sensitive to the air temperature, even 0.2°C minus deviation may fail the combustion. The combustion reaction is self-sustainable, which saves the energy supply. And the low ignition temperature means the combustion reaction can be carried out in a conventional spray dryer. Our results provide a feasible way to mass production of nanocrystalline ITO powders, which as a methodology, may be extended to the production of other oxide nanopowders.