An Al-based composite powder (Al-2%C) was prepared by mechanical alloying (MA). Mixed powders were cold compacted and annealed using two consecutive treatments. Microstructure progresses in both; the as-milled and the as-pressed and annealed conditions were characterized by X-ray diffractometry (XRD) and transmission electron microscopy (TEM). During MA, C diffused into Al to form a solid solution. However, for MA, primary compaction and 1 h sintering at 650°C was insufficient to synthesize Al with C. Only after secondary pressing and long-time annealing at 550°C, fine precipitates of Al 4C 3were formed throughout the matrix. Increase in Al 4C 3dispersion and stabilization of a dense dislocation substructure was the main source of systematic rise in both electric resistivity and hardness.