The microstructure evolution and mechanical properties of high-Zr containing titanium matrix composite (TMC) sheets with different deformation amounts were systematically studied. The results showed that the degree of αp phase refinement and the content of silicide precipitation of TMC sheets increase with the increase in deformation amount during hot rolling, which is sensitive to the preheating and reheating during rolling. The refined αp phase can impede the effective slip distance of dislocations and the silicide precipitated in the inner α phase can also strengthen αp phase, while the nano-αs phase can strengthen the βt domain. Due to the different hardness values of αp and βt domains, the αp/βt boundaries can induce back stress to βt domain and forward stress to αp, leading to heterogeneous deformation induced strengthening effect. The dislocation motion in αp phase was analyzed by transmission electron microscopy (TEM), which showed that the large deformation causes the dislocations to be tangled and unable to be distinguished. This indicates that dislocation strengthening is an indispensable strengthening mechanism until high-temperature tensile deformation. The ultimate tensile strength (UTS) and yield strength (YS) of the TMC sheets reach 726 MPa and 634 MPa at 650 °C, respectively, while the UTS at room temperature reaches the maximum of 1445 MPa, giving the TMC sheets a great application prospect in aerospace fields. Due to the strengthening of βt domain and αp phase, dislocations are blocked at the αp/βt boundaries. As a result, the failure of TMC sheet can be attributed to cracks distributed at αp/βt boundaries. The cracks around reinforcements also cannot be ignored due to the load transfer from matrix to reinforcements.