An　effective　two-step　dispersion　process　for　producing　carbon　nanotube　(CNT)-reinforced　magnesium　alloy　(CNT/AZ31)　composites　was　developed,　and　the　microstructure　and　the　mechanical　properties　of　the　composite　were　investigated.　The　process　includes　the　preparation　of　a　CNT/Mg　precursor　with　uniformly　dispersed　CNTs　and　the　synthesis　of　CNT/AZ31　composites　by　subsequent　melting　and　hot　extrusion.　An　analysis　showed　that　the　CNTs　uniformly　disperse　in　the　molten　AZ31　without　agglomeration　because　of　the　use　of　the　CNT/Mg　precursor.　The　structure　of　the　CNTs　was　not　destroyed,　and　good　interfacial　bonding　existed　between　the　CNTs　and　the　AZ31　matrix.　The　tensile　yield　strength　of　the　CNT/AZ31　composite　was　22.7%　greater　than　that　of　the　monolithic　AZ31　alloy　without　an　obvious　decrease　in　elongation　and　the　compressive　yield　strength　increased　by　53　%　with　the　addition　of　0.05　vol.　%　CNTs.　The　reasons　for　the　increase　in　strength　are　the　decrease　in　grain　size　of　the　matrix　due　to　the　heterogeneous　nucleation　effect　of　the　CNTs　and　the　good　interfacial　bonding　between　the　CNTs　and　the　matrix.　In　addition,　the　compressive　strength　of　the　CNT/AZ31　composites　was　sensitive　to　the　grain　size,　which　implies　that　the　addition　of　CNTs　affects　the　compression　behaviour　of　the　CNT/AZ31　composites.　(C)　2015　Elsevier　B.V.　All　rights　reserved.