Aluminum matrix composite (AMC) reinforced with in-situ Fe₂Al₅ intermetallics particles was prepared through annealing treatment of the cold-sprayed Al/Fe composite precursor with an Al/Fe weight ratio of 85:15. The deformation characteristics of Al and Fe particles in cold spraying process and the effect of heat treatment temperature on the in-situ Fe₂Al₅ intermetallics formation and the morphology evolution were investigated. The results showed that the cold-sprayed Al/Fe composite deposit had a dense microstructure and its composition was nearly same as that of original powder mixture, and soft Al particles exhibited the significantly intensive deformation compared to Fe particles, which caused the elongation of Al grains. The Fe₂Al₅ intermetallics were formed and uniformly dispersed in the Al matrix after annealing at 500°C. The content of Fe₂Al₅ phase increased with raising annealing temperature and Fe particles in Al/Fe composite were fully consumed by diffusion alloying reaction with Al matrix above 550°C and simultaneously the fragmentation of Fe₂Al₅ intermetallics particles occurred.