An experimental study is reported on heat treating rapid solidified Al-12 wt% Si alloy with 355–425 μm powder size. Fast heat treatments at 813 K revealed morphological shifts of eutectic Si from the as-atomized condition to those after annealing. The Si network of the as-atomized samples showed a fine dispersed coral fibrous architecture. This feature via rapid cooling brings the prospect of quickly disintegrating and spheroidizing Si in a few minutes without chemical modification. By adopting different exposure times, it was possible to investigate fragmentation and coarsening of the eutectic Si. The integrity of the Si network is very sensitive to the Si spheroidization treatment transforming into a network of round Si particles. It is also seen that the material softens in the earlier stages of heat treatment, especially after 2 min of heat treatment. The breakdown in Si rods in a rapidly solidified alloy is shown to take place with a mixed mechanism of interface or internal rod diffusion and diffusion of supersaturated Si through the α primary phase to the Si rods in the eutectic. The quantitative analysis of the microstructures coupled with an analytical strengthening model resulted in good agreement between experimental and calculated data.