Densification behavior of composite powders was investigated during cold compaction. Experimental data were obtained for aluminum alloy powder mixed with zirconia powder inclusion under triaxial compression. The Cap model with constraint factors was implemented into a finite element program (ABAQUS) to simulate compaction responses of composite powders during cold compaction. Finite element results were compared with experimental data for densification behavior of composite powders under cold isostatic pressing and die compaction. The agreements between experimental data and finite element calculations from the Cap model with constraint factors were good.