Microstructure developments during the milling of Al2O3-5 wt% Al composite powder in an attritor and subsequent sintering of the precursor by inductively coupled argon plasma are presented. After 4 h of milling the precursor contained tubular ceramic-metal and uniform ceramic regions. With an increase in the milling period the ceramic-metal regions broke into smaller and almost globular regions, and the smaller regions became dispersed in the ceramic regions. After 8 h of milling the composite powder had a stable microstructure and contained 0.25-0.35 mum clusters. The sintered composite was > 99.7% dense and its microstructure consisted of ceramic-metal regions which were dispersed in the matrix of a ceramic region. The sizes of ceramic grains in ceramic-metal regions and the ceramic regions were separated by 30-100 nm wide metal layers. The microstructure of the ceramic-metal region showed many features of interpenetrating phase composites. The Knoop and Vickers microhardnesses of the composites at 5-10 N loads were 410-450. Under 10 N loads in Knoop and Vickers’ microhardness tests the crack length was 11 +/- 3 and 3 +/- 0.5 mum, respectively. The crack propogation mechanisms in the indented areas are discussed.