In situ Al2O3np/Al-Al11Ce3 nanocomposite was successfully synthesized from Al-CeO2 system using a novel two-step processing method that combines liquid-state mechanical mixing(step-I) and sonochemistry melt reaction(step-II). The microstructural evolution and mechanical properties were investigated by optical microscopy(OM), scanning electron microscopy(SEM), transmission electron spectroscopy(TEM) and tensile tests, respectively. A good spatial distribution of CeO2 particles in the Al melt was achieved due to reactive wetting during step-I, and the following formation of Al2O3 np during step-II was attributed to the cavitation-accelerated interfacial reaction. The solidified microstructure comprised uniformly dispersed Al2O3 np in the matrix and ultrafine lamellar Al-Al11Ce3 at the grain boundaries. Such unique microstructure endowed Al2O3np/Al-Al11Ce3 nanocomposite with a good balance between tensile strength(175 MPa) and ductility(18.5%). The strengthening mechanisms of the nanocomposite included grain refinement, Orowan strengthening and quench strengthening, among which Orowan strengthening contributed the most to the yield strength of the nanocomposite.