The microstructure of an AlCu4Mg1Ag alloy reinforced with 15 vol % Al2O3-Saffil fibers was investigated by analytical transmission electron microscopy and compared to the microstructure of the unreinforced alloy. The investigation results show that the composite matrix is enriched in Si as a consequence of the interfacial reaction between the Mg from the alloy and the SiO2 from the fiber and fiber binder. The presence of Si in the composite matrix modifies the characteristic precipitation state of the monolithic Al-alloy: in the peak aged TG-temper, the phases Omega + S＇ are substituted by a fine and homogeneous precipitation of theta＇ plates, and a new type of rod-shaped precipitates. On overageing, these rod-shaped precipitates can be classified into two categories: precipitates containing Al, Cu, Mg, and Si (possibly a Q-phase precursor) and Si precipitates that act as nuclei for theta＇.