Metal matrix composites based on aluminum are frequently utilized in sophisticated engineering applications because of their improved mechanical performance. This study used the stir-casting method to create hematite (Fe₂O₃)-reinforced LM6 aluminum alloy composites with reinforcement ranging from 0 to 12 weight percent. At 3–6 weight percent reinforcement, microstructural examination showed uniform particle distribution and good interfacial bonding; at higher levels (9–12 weight percent), clustering and porosity were seen. While ductility declined with increasing hematite content, mechanical characteristics demonstrated a notable improvement in hardness and compressive strength, reaching maximum values at 12 weight percent reinforcement. At lesser amounts of reinforcing, heat treatment increased strength even more and partially recovered ductility. The range of 6–9 weight percent hematite was found to have the best balance between strength and ductility. These findings demonstrate the potential for enhanced structural performance of hematite-reinforced LM6 composites.