We successfully developed Al-Si-Transition Metal (TM) -Rare Earth (RE) Powder Metallurgy (P/M) alloy with fine microstructure, which has high strength at high temperature. This material was compacted rapidly solidified powder and directly consolidated by hot extruding or forging. Before consolidating, rapid heating was performed on powder compaction in order to keep the fine microstructure in powder state. We have also investigated the processing conditions of this new alloy by computing simulations and experiments.