The present investigation aims at fabricating a functionally graded Al-6Cr-Y2O3 composite and its microstructural and property characterization. Al-6Cr-alloys with varying percentage of Y2O3 (5-10 vol. %) have been used to fabricate FGM by powder metallurgy route. The samples were subsequently subjected to solution treatment at 610°C for 4 h followed by artificially aged at 310°C for 4 h. The microstructure, hardness and wear behavior of these FGM have been evaluated. FGM exhibited superior hardness (360 ± 5 VHN) as compared to the unprocessed composites (220 ± 5 VHN) due to the uniform dispersion of Y2O3 particles. Wear resistance of Al-6Cr-10 Y2O3 FGM were compared that of with pure Al-6Cr alloy by dry abrasive wear test. Al-6Cr-10 Y2O3 FGM composites were found to exhibit higher wear resistance with the minimum wear rate of 0.009 mm3/m compared to the Al- 6Cr alloy wear rate 0.02 mm3/m.