For the past decades researchers are showing immense interest to investigate the natural advantage of preparation of composites from minerals such as bauxite particles, and proved their effectiveness as cost effective reinforcing agents in fabrication of high performance composites. This study, is a new attempt in using the Iraqi natural bauxite powder with different proportions (2, 4 and 6 wt%) in preparation of aluminum metal matrix composites (AMMCs) using stir casting and Mg additives. In experimental work, the bauxite stones were crashed and milled, then the powder was fired at 1400 ○ C. The powders were characterized using particle size, XRD and XRF analysis. The AMMCs casts were machined, polished, preheated, and their properties were characterized using hardness measurements, microstructural observations, and calculation of their Young's modulus, Poisson's ratio and fracture toughness. Also, their fracture toughness were evaluated by means of crack mouth opening displacement (CMOD) measurements from extensometer recordings. The results proved the successful production of AMMCs with improved fracture toughness, hardness and elastic modulus properties using Mg and Iraqi fired bauxite added at 2 and 4 wt% by stir casting. Moreover, results from CMOD measurements showed the effect of addition bauxite particles at 2 and 4 wt% in increasing "maximum load at failure" and "critical CMOD at critical load" of the matrix materials to about " 25 and 44%" , and " 32 and 47%", respectively. Also, at these ratios, the calculated fracture toughness of the matrix materials by means of KIC, and young modulus showed improvement at about "22 and 69%", and "8 and 12%", respectively. Addition of bauxite at 6% could not give the required improvement in the fracture toughness despite its effects in recording the highest improvements in hardness (57%) and elastic modulus (22%) due to the brittle behavior of AMMCs at this ratio.