Nano-aluminum powders and nano-ZrO2 reinforcement particles were mechanically milled and hot-pressed to produce Al–ZrO2 nanocomposites. Microstructure and mechanical properties of Al–ZrO2 nanocomposites were investigated using scanning electron microscope (SEM), energy-dispersive X-ray spectroscopy (EDX), and X-ray diffraction (XRD) analyses and by performing hardness and compression testing. Uniform particle distribution was obtained up to 3 wt% of nano-ZrO2 particles using nano-sized aluminum powders as matrix powders and by applying a mechanical milling process. As the nano-ZrO2 reinforcement particles were uniformly distributed in the matrix, the relative density of the Al–ZrO2 nanocomposites increased up to 3 wt% nano-ZrO2 particles with an increase in milling time; on the other hand, the relative density decreased and the porosity increased with high-weight fractions (>3 wt%) of nano-ZrO2 particles due to the negative combined effect of less densification and an increase in the number of particle clusters. The hardness and compressive strength of the Al–ZrO2 nanocomposites improved despite increased porosity. However, the compressive strength of Al–ZrO2 nanocomposites with a high amount (>3 wt%) of nano-ZrO2 particles began to decrease due to the negative combined effect of the less densification of the powder particles and the clustering of nano-ZrO2 reinforcement particles. The brittle-ductile fracture occurred in the Al–ZrO2 nanocomposites.