Carbon fiber/Mg-alloy composites were fabricated by powder metallurgy technique using short carbon fibers without and with electroless plated Ni-coating as reinforcer and AZ91D powder as matrix．Then their interfacial morphology, elemental composition,mechanical properties and damping capacities were characterized by means of SEM,TEM-EDS,tensile tests and dynamic mechanical analyzer (DMA)．Results shows that the carbon fibers are uniformly distributed in the composites and preferentially oriented paralleling to the extrusion direction．The Ni coating improves the wettability between the carbon fibers and AZ91D matrix. Based on the strain spectrum by different frequency strain and G-L characteristic line, it follows that there should be a damping mechanism other than the known dislocation damping mechanism for the composite. With the increasing strain frequency, the control step for the damping performance of composite changes mainly from interface slip to dislocation. The damping capacity of Ni-coated carbon fiber reinforced magnesium matrix composites increase with the rising temperature. One damping peak exists in the range of 250~300 ℃.The peak temperature moves to higher temperature with the increasing frequency,which shows the characteristics of the thermal activation of relaxation process. According to the Arrhenius formula the calculated thermal activation is 3.448 eV.