In this work, TiAl(C, N) solid solution with lamellar structure-enhanced TiAl matrix composites was synthesized by vacuum arc melting, using bulk g-CN, Ti, and Al powders as raw materials. The phases, microstructures, interfaces, and mechanical properties were investigated. MAX phase of TiAl(C, N) solid solution with lamellar structure was formed. During the melting process, first, CN reacted with Ti to form Ti(C, N) by Ti + CN → Ti(C, N). Then TiAl(C, N) was formed by a peritectic reaction of TiAl(l) + Ti(C, N)(s) → TiAl(C, N). CN is the single reactant that provides C and N simultaneously to final product of TiAl(C, N). The interfaces of TiAl//TiAl(C, N) and TiAl(C, N)//Ti(C, N) display perfect orientation relationships with low misfit values. The microhardness, compressive strength, and strain of best-performing TiAl-10 mol % TiAl(C, N) composite were improved by 45%, 55.7%, and 50% compared with the TiAl alloy, respectively. Uniformly distributed TiAl(C, N) and unreacted Ti(C, N) particles contributed to the grain refinement and reinforcement of the TiAl matrix. Laminated tearing, particle pull-out, and the crack-arresting of TiAl(C, N) are crucial for the improvement in compressive strength and plasticity of the composites.