In this study, SiC nanoparticles were added into matrix alloy through a combination of semisolid stirring and ultrasonic vibration while dynamic precipitation of second phases was obtained through multi-pass forging with varying temperatures. During single-pass forging of the present composite, as the deformation temperature increased, the extent of recrystallization increased, and grains were refined due to the inhibition effect of the increasing amount of dispersed SiC nanoparticles. A small amount of twins within the SiC nanoparticle dense zone could be found while the precipitated phases of Mg17Al12 in long strips and deformation bands with high density dislocations were formed in the particle sparse zone after single-pass forging at 350 °C. This indicated that the particle sparse zone was mainly deformed by dislocation slip while the nanoparticle dense zone may have been deformed by twinning. The yield strength and ultimate tensile strength of the composites were gradually enhanced through increasing the single-pass forging temperature from 300 °C to 400 °C, which demonstrated that initial high forging temperature contributed to the improvement of the mechanical properties. During multi-pass forging with varying temperatures, the grain size of the composite was gradually decreased while the grain size distribution tended to be uniform with reducing the deformation temperature and extending the forging passes. In addition, the amount of precipitated second phases was significantly increased compared with that after multi-pass forging under a constant temperature. The improvement in the yield strength of the developed composite was related to grain refinement strengthening and Orowan strengthening resulting from synergistical effect of the externally applied SiC nanoparticles and internally precipitated second phases.