An experimental study of microstructure and mechanical properties in the Al2O3 particulate reinforced 6061 Aluminum composites has been used to determine the effect of extrusion and particle volume fraction (20, 26, 30, 40, 50, 60%Vf) in deformed metal matrix composites. The microstructure of Al2O3 /6061Al composite before and after hot extrusion is investigated by TEM and SEM. Results show that dislocation and subgrain generated after hot extrusion as well as the particle distribution of composite become more uniform with extrusion ratio of 10:1. The ultimate strength, yield strength and elongation of the composite also increase after hot extrusion. Dispersion strengthening and subgrain boundary strengthening is discussed and also the effect of precipitate introduced by heat treatment both after casting and after extrusion. The yield stress (0.2% offset) of the composites has been calculated and predicted using a standard dislocation hardening model. Whilst the correlation between this and the measured value of yield stress obtained in previous experimental test is reasonable.