We previously proposed the toughening and strengthening mechanisms of alumina-based nanocomposites on the basis of dislocation activities, assuming that nano-sized particles were embedded within the alumina grains. In this research, we fabricated both intragranular dominant and intergranular dominant nanocomposites of alumina/nickel(Ni) system. In order to fabricate intragranular dominant nanocomposites, γ-alumina powder with many nanopores was used as a starting material through a soaking method. Intergranular dominant nanocomposites were prepared using α-alumina powder as a starting material. Monolithic alumina samples were also sintered for comparison. Mechanical, thermal, and electrical properties were estimated for those specimens. The results showed that the intragranular nanocomposites had a higher mechanical strength and fracture toughness than the intergranular nanocomposites. The values of thermal expansion and thermal conductivity were slightly high in the intragranular nanocomposites compared to the intergranular one. The intergranular nanocomposites indicated a low dielectric breakdown voltage. Relations between the functional properties of the nanocomposites and the location of the dispersed Ni particles were discussed based on dislocation activities and the percolation model.