NiAl-based hybrid composites containing 5, 15 and 30 volume percent of A12O3 fibers in addition to AIN dispersion particles were fabricated via a powder metallurgy route. The strengthening mechanisms associated with the short A12O3 fiber in NiAl-(A1N)dispersion,-(A12O3)fiber, composite were studied with an emphasis on the effect of thermal residual stress on the compressive strength at room temperature and 1300K. At 300K, the yield strength of the composites was predicted using a linear superposition of the monolithic yield strength, direct fiber strengthening and tensile matrix residual stresses. The prediction shows good agreement with the measured data. The majority of the room temperature strengthening is attributable to the residual stress. At 1300K, the strengthening was achieved only by the load sharing of the fibers and there is no direct influence from the process-induced thermal residual stresses since they were completely relaxed at this temperature.