The impact of Samarium (Sm) addition on hypereutectic Al-Ni alloys was systematically investigated, focusing on microstructural changes and thermal-physical, mechanical properties. The addition of 0.1–0.5 wt% Sm resulted in the refinement of primary Al3Ni phases from coarse lath-like structures to small particles, enhancing mechanical properties and reducing thermal expansion coefficients (CTE). Thermal conductivity (TC) improved with 0.1–0.3 wt% Sm addition, but declined at the amount of 0.5 wt%. Excessive Sm addition leads to the formation of a Sm-rich phase, characterized by a two-phase mixed structure of Al11(Ni, Sm)3 surrounded by Al4Sm. Sm addition lowered the precipitation temperature of the primary Al3Ni phase, inducing significant constitutional undercooling and exhibiting a phase refinement effect. The Al-9Ni-0.3Sm alloy showed excellent performance, with a TC of 211.8 W/(m·K), CTE of 17.3×10−6/K (@25–100 °C), ultimate tensile strength of 169.5 MPa, and elongation of 10.4 %. Optimal addition of Sm improved TC, mechanical properties as well as reduced the CTE in the Al alloy at the same time and showed a good modification effect.