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On September 13, 2006, MTI MicroFuel Cells Inc. ("MTI Micro"), a majority-owned subsidiary of Mechanical Technology Incorporated ("MTI"), entered into Amendment No. 3 to the Strategic Alliance Agreement by and between The Gillette Company ("Gillette") and MTI Micro (the "Amendment"). The Amendment amended the Strategic Alliance Agreement, dated September 19, 2003, between Gillette and MTI Micro, as amended by Amendment No. 1 to the Strategic Alliance Agreement, dated as of August 18, 2004, and Amendment No. 2 to the Strategic Alliance Agreement, dated as of June 20, 2005 (as amended, the "Agreement"). The Amendment provides: A) flexibility, under certain circumstances, for MTI Micro to sublicense the Fuel Refill/Standard Interconnect ("FR/SIC") Technology to Third Parties (as described in the Amendment) for use outside the Target Market (as defined in and modified by the Amendment); B) amended the initial work plan by replacing the existing Milestone 4A (product identification, suitability and OEM validation) under the Agreement with a new Milestone 4A under the Agreement (prototype development and market initiation), which results in the expansion of the work plan and extension of Milestone 4A to accommodate market penetration relating to emerging opportunities including new alliances; and C) clarification of the bilateral termination right, which is exercisable before the completion of Milestone 4 under the Agreement.

This foregoing description of the terms of the Amendment is not complete and is qualified in its entirety by the terms and conditions of the Agreement and the Amendment itself, which MTI intends to file as an Exhibit to its Quarterly Report on Form 10-Q for the period ending September 30, 2006.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.