The composite used in this paper was prepared by hot-pressing ball-milled Mg alloy powders, in which NiTi shape memory alloy fibers in a row were sandwiched. The microstructure and property were examined. It is shown that the composite consisted of a homogenous matrix with uniformly distributed NiTi shape memory alloy fibers, recrystallization took place in the Mg alloy matrix which was subjected to plastic deformation an adequate bonding formed between the matrix and fibers; the density and tensile strength of the composite increased after the hot-forging; the hot-forging process is capable of improving properties of the composite.