The nucleation and growth mechanisms during high temperature oxidation of liquid Al−3% Mg and Al−3% Mg−3% Si alloys were studied with the aim of enhancing our understanding of a new composite fabrication process. The typical oxidation sequence consists of an initial event of rapid but brief oxidation, followed by an incubation period of limited oxide growth after which bulk Al2O3/Al composite forms. A duplex oxide layer, MgO (upper) and MgAl2O4 (lower), forms on the alloy surface during initial oxidation and incubation. The spinel layer remains next to the liquid alloy during bulk oxide growth and is the eventual repository for most of the magnesium in the original alloy. Metal microchannels developed during incubation continuously supply alloy through the composite to the reaction interface. During the growth process, a layered structure exists at the upper extremity of the composite, consisting of MgO at the top surface, MgAl2O4 (probably discontinuous), Al alloy, and finally the bulk Al2O3 composite containing microchannels of the alloy. The bulk oxide growth mechanism appears to involve continuous formation and dissolution of the Mg-rich oxides at the surface, diffusion of oxygen through the underlying liquid metal, and epitaxial growth of Al2O3 on the existing composite body. The roles of Mg and Si in the composite growth process are discussed.