The extruded Al-8%Fe-2%Co RS/PM alloy, produced by gas atomization, exhibited UTS = 460 MPa and 8% elongation at room temperature, and UTS = 250 MPa at 300 degrees C. The properties are strongly influenced by the powder microstructure and the processing conditions used. The optimum mechanical properties can be obtained by the use of powder fraction with particle size <63 mu m. A temperature of about 400 degrees C proved to be the best compromise for degassing and extrusion in order to achieve a low hydrogen content without considerable dispersoid coarsening.