Nickel matrix composites reinforced with different weight percent of alumina short fibres have been fabricated by powder technology route. The alumina short fibres were encapsulated by nickel layers using the electroless deposition technique. The produced alumina/nickel composite powders underwent cold compaction and sintering at 850℃. The alumina/nickel powders as well as the consolidated composites were investigated by optical microscope, scanning electron microscope, XRD and VSM. It was observed that the surface of the alumina short fibres was completely coated with nickel layer and the microstructures of the consolidated compacts show homogeneous distribution of the alumina short fibres in the nickel matrix. The density, electrical conductivity, coercivity, retentivity, saturation magnetization and hardness of the produced alumina short fibres/nickel composites were measured. The relative sintered density and the saturation magnetization were decreased, but the retentivity, the coercivity and the hardness were increased by increasing the alumina short fibres weight percent in the nickel matrix.