Effects of the fabrication processing on the microstructure and properties of composites were investigated. High-density Ni-Co dispersed-Al2O3 (Al2O3/Ni-Co) composites were obtained by hydrogen reduction and consolidated using hot pressing and pulse electric current sintering (PECS) of Al2O3, Ni(NO3)(2). 6H(2)O and Co(NO3)(2). 6H(2)O powder mixtures. Microstructural investigations of the hot-pressed composite fabricated using again wet/dry ball-milled powder mixture after calcination revealed that fine Ni-Co particles, about 145 nm in diameter, dispersed homogeneously at the matrix grain boundaries. In particular, fine microstructure of dispersion with the average size of 90 nm was realized for the specimen consolidated by PECS method. High strength of over 1 GPa and hardness of 19 GPa were measured for the nanocomposites prepared from the again ball-milled powder mixture. The ferromagnetism of nano-sized Ni-Co contributes to the magnetic properties of the composites. A change in the coercive force with dispersion size was observed. Also, the extent of magnetic response by an applied stress was strongly influenced by the size of Ni-Co particles. The relations between microstructure and mechanical as well as magnetic properties are discussed.