The in-situ oxidation technique is an effective method of synthesizing copper matrix composites reinforced by oxide dispersion. In this study, the process of fabricating Cu/Cr2O3 composite by Cr in-situ oxidation in Cu-Cr pre-alloyed powders was investigated. The evolution of the structure formed in the processing of Cu/Cr2O3 composites was characterized by optical microscopy and transmission electron microscopy (TEM). The results show that the sub-solution Cu-Cr alloy powders can be produced by high energy milling, in which Cr powders are first crushed into fine particulates, followed by the formation of Cr sub-solution in copper under the extrusion and impact of high energy grinding balls. In the Cu/Cr2O3 composite fabricated by the Cu-Cr pre-alloyed powders, the Cr2O3 particulates produced exist almost in the original sites of the Cr, and they are dispersed uniformly within the Cu matrix. The distribution of Cr2O3 particulates is similar to that in the full solid solution Cu-Cr powders.