To realize light-weight materials with high strength and ductility, an effective route is to incorporate strong and stiff metallic elements in light-weight matrices. Based on this approach, in this work, magnesium–iron (Mg-Fe) composites were designed and characterized for their microstructure and mechanical properties. The Mg-Fe binary system has extremely low solubility of Fe in the Mg-rich region. Pure magnesium was incorporated with 5, 10, and 15 wt.% Fe particles to form Mg-Fe metal–metal composites by the disintegrated melt deposition technique, followed by hot extrusion. Results showed that the iron content influences (i) the distribution of Fe particles in the Mg matrix, (ii) grain refinement, and (iii) change in crystallographic orientation. Mechanical testing showed that amongst the composites, Mg-5Fe had the highest hardness, strength, and ductility due to (a) the uniform distribution of Fe particles in the Mg matrix, (b) grain refinement, (c) texture randomization, (d) Fe particles acting as effective reinforcement, and (e) absence of deleterious interfacial reactions. Under impression creep, the Mg-5Fe composite had a creep rate similar to those of commercial creep-resistant AE42 alloys and Mg ceramic composites at 473 K. Factors influencing the performance of Mg-5Fe and other Mg metal–metal composites having molybdenum, niobium, and titanium (elements with low solubility in Mg) are presented and discussed.