In the present investigation, the in-situ powder metallurgy (IPM) method was utilized to synthesis aluminum alloy matrix composite powders containing SiC nanoparticles. Specified amounts of SiC particles (with a size in the range of 250-600 µm) together with SiC nanoparticles (average size of 60 nm) were preheated and added to aluminum melt. This mixture was stirred via an impeller at a certain temperature for a predetermined time. The kinetic energy of the impeller was transferred to the melt via the non-wetting SiC particles and resulted in melt disintegration. The liquid droplets created by this process were then solidified upon cooling the blend resulting in a mixture of Al powders and SiC particles. This blend was passed through a 250 µm sized sieve and a mixture of Al powders and SiC nanoparticles was produced which could be subsequently used as a feedstock for preparation of Al-SiC nano-composites via the standard powder metallurgy methods. The results confirmed that the surface condition (oxidized vs. as-received), amount and different proportions of the added nano-sized and micron sized SiC particles as well as the chemistry of the metallic charge (CP aluminum or Al-1wt.%Mg) affect the size distribution and yield of the resultant sub-250 µm sized powders. The scanning electron microscopy (SEM) studies revealed that Al/SiC composite powders containing nano-sized SiC particles could be produced by using Al-1 wt.% Mg as the matrix alloy.