In present study microstructural evolution during swaging on aluminium alloy based metal matrix composite (MMC) reinforced with 15% volume fraction silicon carbide (SiC) particles is presented. Samples were swaged at room temperature in steps with reducing die dimensions using rotary swaging technique. SEM and TEM are used to study the microstructural characteristics of swaged samples. SEM observations were made to understand the flow and deformation characteristics of deforming aluminium matrix in the presence of second phase and reinforced SiC particles during swaging. TEM observations on swaged samples confirmed the formation of ultra-fine grains in Al-15%SiC MMC. It is shown that the dynamic recrystallisation occurring in the proximities of second phase particles during the deformation at room temperature, leads to very fine grained microstructure.