In order to improve the combustion performance of aluminum powder in the solid propellants, the aluminum matrix composite was prepared by high energy ball milling with aluminum powder as matrix and FeF₃ as additive. The effects of powder ratio and milling parameters on the micromorphology, structure and thermal properties of aluminum matrix composites were studied. The micron grade aluminum matrix composites were prepared by optimized process. TG-DSC analysis showed that Al-FeF₃ composite can realize fast oxidation at lower temperature (600-1400 ℃) in the oxidation process. The end-fired 75 engine test demonstrated that no large molten aluminum powder residue was observed in the engine shell after replacing spherical Al with Al-FeF₃ composite. The residue rate was decreased from 6.151% to 4.215%, indicating enhanced combustion efficiency for the Al-FeF₃ composite. Therefore, Al-FeF₃ composite has potential application value in reducing combustion residue rate of solid propellant and two-phase flow loss of engine.