Mechanical alloying behaviour was investigated after adding 6, 8, 12wt% Fe powder into A1 matrix, respectively, in order to develop Al alloy. And the mechanical characteristics of the alloy which was produced by the above method were studied. The hardness and ultimata tensile strength of the material with different compositions were found to be increased with annealing temperatures and holding times. Intermetallic compound of $Al_3Fe$ and carbide of $Al_4C_3$ phases, which were generated from the different compositions during annealing, were found. It was suggested that enhancement of mechanical properties of Al-Fe alloy system was due to the presence of these preapitates that constrained grain growth and blocked dislocation movement in the alloy system.