The production of primary aluminum is an energy costly process. With the global warming being of concern, the secondary aluminum stream is becoming an even more important component of aluminum production and is attractive due to its economic and environmental benefits. Recycling of aluminum by new solid state recycling techniques instead of conventional remelting and subsequent refining processing can result in significant energy savings. Severe Plastic Deformation (SPD) techniques have been applied for consolidating nano particles into fully dense materials with good mechanical properties. However, solid state recycling of scraps by SPD is only in the beginning. In the present study, degreasing of aluminum chips from the machine workshop was investigated by a thermal method and chemical treatment. Thereafter, the decoated chips were recycled by Cyclic Extrusion Compression (CEC) at deformation temperatures between 400 and 500 °C. The microstructure and mechanical properties of the recycled aluminum scrap processed by SPD were subsequently investigated. The results show that SPD technology provides a promising alternative for recycling of aluminum scrap. Thermal degreasing of aluminum scrap resulted in more oxidization of aluminum scrap particles. Visible interfaces between chips were observed even at a low magnification.