A method of mechanical alloying process is described. Carbon transformation to Al4C3 is characterized within the different heat treatment schedules and nine commercial carbon powders are tested. The micromechanism of carbon incorporation into the metallic powder, and its compacting are described. The influence of dispersed carbides on mechanical properties is evaluated together with the influence of deformation on microstructure and properties. It was proved that the transformation efficiency of carbon to Al4C3 by heat treatment of aluminium with the porous furnace black and electrographite is higher than that of the hard cracked graphite. Microstructure changes consisted of the fracture processes and welding of the particles with incorporation of C phase and forming of final granules. The dispersed phase Al4C3 particle size was measured on thin foil structures, and it was constant and as small as 30 nm. The particle size was influenced neither by the carbon type nor by the heat treatment technology applied. Subgrain size measured in the range of 100 grains in thin foils depended on the carbon type, as well. It ranged from 0.3 to 0.7 µm. Using a DSI (depth sensing indentation technique), the Martens hardness, indentation modulus E and deformation work W for Al matrix and Al4C3 particles have been measured. The temperature dependence of ductility, and reduction of area in the temperature range of 623–723 K and strain rate of 10−1 s−1, indicated a considerable increase of these properties. In a case when the volume fraction of Al4C3 changes from lower to higher, the grain rotation mechanism dominates instead of the grain boundary sliding. The comparison of the tensile test results and changes in fracture for the Al-Al4C3 system at two temperatures and two strain rates is summarized. The dependence of the minimum deflection rate on the applied force as well as the dependence of the time to fracture on the applied force for two temperature levels (623 and 723 K) by small punch testing are depicted. The composite was tested in two different states: a) as received by mechanical alloying with hot extrusion (HE) as the final operation and b) ECAPed (mean grain size of 100–200 nm). The dependence of the minimum deflection rate on the applied force as well as the dependence of the time to fracture on the applied force for two temperature levels are evaluated. The anisotropy of the creep properties and fracture using small punch tests for the Al-Al4C3 system produced by ECAP were analysed.