This paper describes insights from an experimental investigation into tailoring microstructure of an Al–Y eutectic alloy to improve its trade-off between strength and electrical conductivity via casting, cold rolling, and annealing. Mechanical testing, ex-situ microscopy, and in-situ synchrotron X-ray diffraction were employed to characterize microstructural evolution as well as strengthening and conduction mechanisms. The as-rolled alloy exhibited substantially improved strength and electrical conductivity compared to the as-cast alloy. The rolling deformation induced a lamellar structure in the alloy consisting of coarse primary α-Al grains organized into fibers floating within ultrafine eutectic matrix of α-Al grains and β-Al3Y particles. Subsequent annealing at 280 °C for 1-h caused partial recrystallization of the primary α-Al phase, while annealing at 400 °C for 1 h cause both α-Al and β-Al3Y phases to undergo recrystallization with coarsening of α-Al but reduction in size of β-Al3Y. Interestingly, stacking faults were observed to be thermally stable during the annealing processing contributing to the heat resistance of the alloy. Relative to the cold-rolled state, the alloy after annealing at 280 °C for 1 h retained a tensile strength of 90 % with improved ductility and electrical conductivity. Furthermore, the alloy after annealing at 400 °C for 1 h lost some strength but electrical conductivity further increased. The effects of cold rolling on the lamellar-structure creation and subsequent annealing on the microstructural changes and resulting strength and electrical conductivity of the alloy are discussed in this paper.