Nickel foam reinforced AZ91 magnesium alloy was fabricated by using melt infiltration and water quenching methods. The mechanical properties were measured in compressive and tensile deformation modes. Fracture surfaces were examined by scanning electronic microscopy. The results show that addition of nickel foam results in a significant increase in elastic modulus, yield strength of the composite material. However, ductility of the composite was adversely affected when compared to the unreinforced monolithic counterpart.