The use of ultrasonic non-linear effects to disperse nano-sized ceramic particles in molten metal has been studied and nano-sized SiC particle reinforced AZ91D magnesium composites were fabricated. The microstructure of the composites was investigated by high-resolution scanning electron microscopy (SEM), X-ray photo spectroscopy (XPS), and high-resolution X-ray diffractometer (XRD) techniques. Experimental results show a nearly uniform distribution and good dispersion of the SiC nanoparticles within the magnesium matrix, although some of small agglomerates (less than 300 nm) were found in matrix. Detailed study reveals that the SiC nanoparticles were partially oxidized. The microhardness of composites have been improved significantly compared to that of pure AZ91D. The interaction between SiC nanoparticles and the matrix was investigated. The interaction between ultrasonic waves and nanoparticles was also discussed. The ultrasonic fabrication methodology is striking to rapidly produce a wide range of nano-sized particles reinforced metal matrix composites.