The microstructural development during annealing of a cold-deformed 6061Al metal matrix composite (MMC) reinforced with either 3 or 20 mu m diameter SIC particles has been investigated. The composites were compressed to low (< 10%) levels of strain and then annealed at either 350 or 450 degrees C for different times. Microstructure examination was carried out by transmission electron microscopy and optical microscopy. The results reveal that prior grain boundaries and constituent particles are the dominant sites for recrystallization in both composites, although some nucleation was observed adjacent to the larger SiC particles. The concurrent presence of Mg2Si precipitates affected the progress of recrystallization.