A new Al-Ti fibers reinforced Mg alloy matrix composite was fabricated by powder metallurgy and its microstructure was examined using OM, SEM and XRD. It is shown that there was a better interface of bonding between the Al-Ti fiber and Mg alloy matrix, and the fibers were not damaged in the course of preparing. A few precipitates of Mg 17 Al 12 with a diameter less than 1.5μm were found at the interfaces.