Novel magnesium matrix composites reinforced with carbon nanotubes have been processed by powder metallurgy. Blends of metal powders and multi-wall carbon nanotubes were compacted by uniaxial hot pressing followed by hot isostatic pressing. A uniform dispersion of nanotubes in the metal matrix was obtained. A coating method of nanotubes is described, which is promising to improve the matrix-reinforcement bonding strength.