To improve the heat release and reactivity of Al, Li was incorporated into Al via the centrifugal atomization in this study for obtaining Al-Li alloy powders. The microstructure and composition of the samples were characterized by SEM, XRD, and ICP. The oxidation kinetics were evaluated via TG/DSC, and the energetic performance of the Al-Li/KP composites was tested. The results show that spherical Al-Li alloy powders with the well-distributed dendritic structure are obtained that are mainly composed of αAl and Al-Li compounds. The oxidization rate of Al-Li alloy powders is higher than pure Al, owing to the decreasing activation energy caused by the catalysis of the soluble Li in Al and Al-Li compounds. The shorter ignition delay and higher reaction rate of Al-Li/KP with increasing Li content in Al-Li alloy powders is a result of the microexplosion of Al-Li. Therefore, Al-Li alloy powders with high reactivity are promising fuels for energetic materials.