Abstract: Carbon fiber/magnesium composites were fabricated by powder metallurgy techniques using short carbon fibers electrolessly coated and uncoated by nickel as reinforcement and pure magnesium powder as matrix. SEM- EDS, TEM, XRD and tensile tests were used to characterize their interfacial morphology, elemental composition, phase composition and mechanical properties. Results showed that the carbon fibers were uniformly distributed in the composites and were preferentially oriented parallel to the extrusion direction. The interfacial bonding between carbon fibers and magnesium was improved by the nickel coating. The improvement was achieved by a reaction between the nickel coating on the fibers and magnesium to form Mg₂Ni. The reinforcing effect of the nickel-coated carbon fibers was achieved by interfacial load transfer as evaluated by comparing the measured yield strengths with the theoretical values.