Disclosed herein is a composite material comprising a metal and nanoparticles, in particular carbon nano tubes as well as a method of producing the same. A metal powder and the nanoparticles are processed by mechanical alloying, such as to form a composite comprising metal crystallites having an average size in the range of 1-100 nm, preferably 10 to 100 nm or in a range of more than 100 nm and up to 200 nm at least partly separated from each other by said nanoparticles.