Quasicrystalline (QC) powder was prepared by mechanical alloying and subsequent annealing of Al65Cu23Fe12 composition. Obtained quasicrystals were milled together with pure aluminium in the ratios of Al-20 wt% QC and Al-10 wt% QC. A hot consolidation of samples was performed under pressure of 4.5 GPa at elevated temperatures. X-ray diffraction study of the as-consolidated samples shows that the quasicrystalline phase remained in the samples if consolidation temperature was lower than 500degreesC. Consolidation at higher temperatures results in disappearing of the QC and formation of crystalline phases, such as Al2Cu and Al7Cu2Fe by reaction between QC and aluminium matrix. SEM study of microstructure of the composite alloys shows an absence of open porosity in the consolidated bulk samples. Besides rather large particles of reinforcing phase of about 20 mum there are also very small particles of less than 1 mum. The uniformity of particles distribution in the matrix increases with increase in the milling duration. Microhadrness measurements and compression tests were performed, an effect of the treatment parameters on the compressive strength was studied. (C) 2004 Kluwer Academic Publishers.