Magnesium based composite with 2.5 weight percentage of nano-sized Al2O3 particulates reinforcement was fabricated using powder metallurgy technique. Al2O3 particulates with an equivalent size of 50-nm were used as reinforcement. Microstructural characterization of the materials revealed recrystallization and grain refinement due to the presence of nano-Al2O3. Mechanical properties characterization revealed that the presence of nano-Al2O3 particulates as reinforcement lead to a significant increase in hardness, elastic modulus, 0.2% yield strength and UTS and ductility of pure magnesium. The results revealed that the specific tensile properties of these materials are superior when compared to high strength magnesium alloy AZ91 reinforced with much higher weight percentage of SiC. An attempt is made in the present study to correlate the effect of nano-sized Al2O3 particulates as reinforcement with the microstructural and mechanical properties of magnesium.