The powder-in sheath rolling was applied to the fabrication of $Al/Al_2O_3$ composite. A stainless steel tube with outer diameter of 12 mm and wall thickness of 1 mm was used as a sheath. Mixture of aluminum powder and $Al/Al_2O_3$ particles of which volume content was varied from 5 to 20 vol.% was filled in the tube by tap filling and then rolled to 75% reduction at ambient temperature. The re]]ed specimen was sintered at 56$0^{circ}C$ for 0.5 hr. The $Al/Al_2O_3$ composite fabricated by the sheath rolling and subsequent sintering showed the relative density higher than 0.96. The tensile strength of the composite increased with the volume content of $Al_2O_3$ particles, and it reached a maximum of 90 MPa which is 1.5 times higher than unreinforced material. The elongation decreased with the volume content of $Al_2O_3$ particles. It is concluded that the powder-in sheath rolling is an effective method for fabrication of $Al/Al_2O_3$ composite.