A novel in-situ reaction system Al-Zr-O was developed. In-situ Al_3Zr and Al_2O_3 particulates reinforced aluminum matrix composites were fabricated by the direct melt reaction technique in the Al-Zr-O system. Microstructures of the composites and crystal morphology of in-situ formed Al_3Zr and Al_2O_3 particulates were analyzed by scanning electron microscope(SEM) and transmission electron microscope(TEM). Results indicate that in-situ formed Al_3Zr and Al_2O_3 particles are finer and well distributed in aluminum matrix. Al_3Zr particulates with a tetragonal structure are mainly in the shape of polyhedron. A few of them are in the form of rectangle. The length/width ratio of the rectangular Al_3Zr is less than 2.0 and the maximum size is 2 μm. In addition, a certain number of Al_2O_3 submicro particles with a hexagonal structure are also generated in this system. Furthermore, it is found that Al_3Zr crystal grows by the mechanism of twinning. The twin plane is (11-4-). The twinning direction is [221].The tensile tests show that the composites synthesized in the Al-Zr-O system exhibits high strength and ductility. There are a lot of ripples with fine particles on the fracture. The principal strengthening mechanisms for (Al_3Zr+Al_2O_3)_p/Al composites may include Orowan strengthening, grain-refining strengthening, solid-solution strengthening and dislocation strengthening. A novel in-situ reaction system Al-Zr-O system developed. In-situ Al_3Zr and Al_2O_3 particulates reinforced aluminum matrix composites were fabricated by the direct melt reaction technique in the Al-Zr-O system. Microstructures of the composites and crystal morphology of in-situ formed Al_3Zr and Al_2O_3 particles were analyzed by scanning electron microscope (SEM) and transmission electron microscope (TEM). Results indicate that in-situ formed Al_3Zr and Al_2O_3 particles are finer and well distributed in aluminum matrix. tetragonal structure are mainly in the shape of polyhedron. A few of them are in the form of rectangle. The length / width ratio of the rectangular Al_3Zr is less than 2.0 and the maximum size is 2 μm. In addition, a certain number of Al 2 O 3 The twin plane is (11-4-). The twinning d The tensile tests show that the composites synthesized in the Al-Zr-O system exhibits high strength and ductility. There are a lot of ripples with fine particles on the fractures. The principal strengthening mechanisms for (Al 3 Zr + Al 2 O 3 ) _p / Al composites may include Orowan strengthening, grain refining, solid-solution strengthening and dislocation strengthening.