The production of TiAl (42 at%Al) based composite with TiC reinforcement (5 vol%) was attempted by a mechanical alloying (MA) method utilizing pure Ti, TiAl prealloyed and graphite powders. The development of MA, microstructure, mechanical properties and oxidation resistance of sintered alloys were investigated. Processed powders after MA for 804 h are characteristically fine and agglomerated with diam. of less than 1 μm. The formation of TiC phase during MA was confirmed. Sintered alloy produced by hot-pressing was found to be consisting of TiAl matrix phase, acicular or platelet TiC particles with 5-10 μm in diam. and a small amount of Al₂O₃. Higher hardness and flow stress than those of TiAl matrix were observed, suggesting a dispersion strengthening effect. Fracture tended to occur after plastic deformation above 800°C . The existence of the fracture strain, for example no less than 10% at 900°C, is demonstrating the ductility at high temperatures. Slight mass gain measured by oxidation test, compared with the case of arc-melt method, and no spalling of oxide scales were indicating good oxidation resistance of this composite intermetallic alloy.