A YAl 2p reinforced Mg–14Li–3Al matrix composite was prepared by stir-casting. The composite was subjected to heat treatment process at 623K for 10h. The effects of heat treatment on particle/matrix interface and mechanical properties were investigated by scanning electron microscopy (SEM), electron probe microanalysis (EPMA), nanoindentation and material tensile tests. The relationships among heat treatment, particle/matrix interface and mechanical properties of the composite were discussed. The results show that atom diffusion of yttrium and aluminum from the reinforcements to matrix may probably lead to the improvement of the transition interface layer between YAl 2 particles and matrix, which is correlated to the increases both in tensile strength and ductility of the composite after heat treatment.