Chopped carbon fibers reinforced magnesium was made using the powder metallurgy technique followed by hot extrusion. In order to enhance the carbon fiber wettability to the matrix, the carbon fibers were nickel-coated by palladium-free activated electroless coating method and then characterized by field emission-scanning electron microscope (FE-SEM) equipped with energy dispersive spectroscopy (EDS). The fiber distribution in composite materials were evaluated by super depth digital microscope and the composite extrusion process was analyzed. The results show that nickel-plated carbon fibers can meet the requirement for the preparation and the dispersion in the composite. The composite containing 4.0wt% carbon fibers can obtain the optimum mechanical properties, and its preparation process is as fellows: its green is produced by applying 420 MPa pressure at room temperature, then consolidated by hot extrusion at 480 °C and 280 MPa pressure, and sintered at 550?°C for 0.5 h.