A slide member of a sintered aluminum alloy includes a matrix (1) formed of an aluminum alloy powder, and aluminum nitride films (2) dispersed along old, i.e. former original, powder grain boundaries of this matrix. When a state in which the aluminum nitride films (2) completely continuously enclose the peripheries of the old powder grain boundaries is defined as a dispersion ratio of 100%, the present aluminum nitride films (2) are discontinuously dispersed at a dispersion ratio of not more than 80%. A powder compact consisting of rapidly solidified aluminum alloy powder is heated and held in a nitrogen gas atmosphere, thereby facilitating reaction between aluminum and nitrogen through an exothermic phenomenon following deposition of elements solidly dissolved in the aluminum alloy, for forming aluminum nitride films dispersed on the aluminum alloy powder grain surfaces.