We successfully developed Al -Si -Transition Metal (TM) -Rare Earth (RE) Powder Metallurgy (P/M) alloy with fine microstructure, which has high strength at high temperature. For example, at 473K, the ultimate tensile strength was 290MPa and fatigue strength on 107 cycles was 130MPa, which is an 80% improvement compared with conventional Aluminum cast alloys. This material was compacted rapidly solidified powder and directly consolidated by hot extruding or forging. The microstructure consists of fine Al crystal grains (grain size; around 200-500nm), and inter-metallic compounds. Before consolidating, rapid heating was performed on powder compaction in order to keep the fine microstructure in powder state. The effect of plastic deformation on consolidating was examined to stabilize properties of this material. The mechanical properties of the present alloy are expected] to contribute to improve performance of various automobile engine parts.