The microstructures and mechanical properties of fullerene powder dispersed AZ91 magnesium alloy composites were examined. The AZ91 with 0, 1 and 5 mass% fullerene additions were produced by extruding a mixture of AZ91 machined chips and fullerene powder. The matrix grains of the extruded materials were equiaxed, and the size was $ 5 mm irrespective of the fullerene content. The agglomerated fullerene powder was aligned parallel to the extrusion direction in the composites. The addition of 1 mass% fullerene had little effect on the elastic moduli, tensile strength and ductility, whereas the addition of 5 mass% fullerene slightly decreased them. A comparison between the tensile properties of the present composites and those of AZ91 alloys processed by various methods was also made. The damping capacity increased steeply by the fullerene addition. The effectiveness of the fullerene addition for the enhancement of the damping capacity of metallic alloys was verified. A good combination of damping capacity, elastic moduli, strength and ductility was attained in the present composites.