Internal oxidation Cu-Al alloy sheet processing has been used to prepare dispersion-strengthened Al2O3/Cu composites. A new technique has been developed that successfully avoids mixed Cu-Al powder preparation, H2-reduction, and sintering processes. The microstructure and phase were investigated by metallurgical microscope, SEM, and TEM. Holding-time, internal oxidation temperature and thickness of Cu-Al alloy sheet were the three key factors with regard to preparing Al2O3/Cu composites by internal oxidation in Cu-Al alloy sheet. The mechanical characteristics and electric properties of Al2O3/Cu composites sheet and hot-extruded rod were examined. The results show hot extrusion process enhances microhardness and ultimate tensile strength to a higher level with and exerts a little influence on high electrical conductivity.