Aluminum alloy matrix composites reinforced with various amounts of Al₂O₃ short fibers have been produced by a combined technique of rheo-compocasting and hot extrusion. Distribution of fibers in the composites fabricated by rheo-compocasting was relatively uniform. A good degree of uniaxial fiber alignment has been achieved by hot extrusion, but a lot of fibers fractured during extrusion. The tendency of fiber fracturing increases as the aspect ratio and the amount of fibers increase. Relatively good bonding between fiber and matrix was obtained by the formation of MgAl₂O₄, and Mg(Al, Fe)₂O₄at the interface between fiber and matrix. In extruded composites, fiber strengthening effect was relatively small since a lot of fibers fractured during hot extrusion. On the other hand, dispersion strengthening effect may increase. In order to improve the fiber strengthening effect, it is important to optimize the extrusion condition with consideration of metal flow in extrusion die.