Combination of rapid solidification and internal oxidation was used for producing a fine dispersion of rare earth oxide particles in the copper matrix. An overall microstructural analysis has shown that the internal oxidation temperature, the rapidly solidified microstructure and its changing before the internal oxidation front strongly influence the mechanism of the internal oxidation process and the resulted microstructure. Internal oxidation in the solid state (at temperatures below the eutectic temperature-T E ) took place mainly by direct oxidation of the intermetallic particles and partly by dissolution of these particles ahead of the internal oxidation front and oxidation of the alloying element from the solid solution. In the semisolid state (α Cu +L) the internal oxidation process occurred by precipitation of the rare earth oxides from the liquid phase and continued with solidification of the nearest surrounding melt. In the former case, the internal oxidation proceeding was unsuccessful in producing suitable oxide particles through the whole ribbon, while the internal oxidation in the semisolid state leads to uniformly distributed, fine oxide particles in the Cu matrix.