This review paper deals with flaws in aluminum-alumina composites and FGMs induced by their manufacturing processes. Aluminum-alumina composites have been studied for many years as potentially interesting materials for applications, for example, in the automotive sector due to their enhanced mechanical strength, wear resistance, good heat conductivity and low specific weight. The focus here is on the interpenetrating phase composites (IPCs) manufactured by infiltration of porous alumina preforms with molten aluminum alloys. The primary objective is to provide an updated overview of research findings on a variety of flaws occurring at different stages of the manufacturing processes. Some precautions on how to avoid processing induced flaws in aluminum-alumina bulk composites and FGMs are mentioned.