The effect of magnesium on thermodynamics and kinetics of oxidation of melted Al-Mg-Si alloy, the microstructure and properties of Al2O3/Al-Mg-Si composites were studied in this paper. It has been found that magnesium promotes nucleating and growing of Al2O3 in Al2O3/Al composite by analysis of thermodynamics and kinetics. The properties of Al2O3/Al composite were improved by microstructure refining due to spinel (MgAl2O4) decomposing. But too high or too low content of Mg in the alloy is disadvantageous for Al2O3 nucleating and growth.