Stacking faults (SFs), similar to other planar defects such as grain boundaries, twin boundaries and heterogeneous interfaces, can be tailored to simultaneously increase strength and ductility of metal matrix composites. However, SFs are rarely observed in Al alloy matrix composites, resulting from the high stacking fault energy (SFE) (166 mJ/m²) of pure Al and its weak dependence on most alloying elements. Therefore, strengthening Al alloy matrix composites with SFs has been a longstanding challenge. In the current work, SFs with a density of 2.8 × 10¹⁵ m⁻² are introduced into an ultrafine-grained Al(Mg)–Al₃Mg₂ composite fabricated by extruding compacted mechanically alloyed and nanostructured Al-11 at.% Mg alloy powder at 703 K. These SFs, together with grain boundaries and solute Mg, increase the yield strength of the as-extruded composite to 700 MPa at a tensile elongation of ∼4%. We show that the Al(Mg) alloy matrix-Al₃Mg₂ interfaces enable the formation of the densely arranged SFs. This finding offers a pathway to tailoring high strength Al alloy matrix composites through manipulating SFs by interface engineering.