The microstructure and mechanical properties of rapidly solidified Al–18 wt% Si and Al–18 wt% Si–5 wt% Fe alloys were investigated by a combination of optical microscopy, scanning electron microscopy, transmission electron microscopy, x-ray diffraction, tensile testing, and wear testing. The centrifugally atomized binary alloy powder consisted of the α-Al (slightly supersaturated with Si) and Si phases and the ternary alloy powder consisted of the α-Al (slightly supersaturated with Si), silicon, and needle-like metastable Al–Fe–Si intermetallic phases. During extrusion the metastable δ-Al4FeSi2 phase in the as-solidified ternary alloy transformed to the equilibrium β-Al5FeSi phase. The tensile strength of both the binary and the ternary alloys decreased with a high-temperature exposure, but a significant fraction of the strength was retained up to 573 K. The specific wear gradually increased with increasing sliding speed but decreased with the addition of 5 wt% Fe to the Al–18 wt% Si alloy. The wear resistance improved with annealing due to coarsening of the silicon particles.