Future 'smart' structures have the potential to revolutionize many engineering applications. One of the possible methods for creating smart structures is through the use of shape memory alloy (SMA) fibres embedded into metal matrices. Ultrasonic consolidation (UC) allows the embedding of SMAs into metal matrices while retaining the SMA's intrinsic recoverable deformation property. In this work, NiTi SMA fibres were successfully embedded into an Al 3003 (0) matrix via the UC layer manufacturing process. Initially the plastic flow of the Al matrix and the degree of fibre encapsulation were observed using optical microscopy. Then microstructural grain and sub-grain size variation of the Al 3003 (0) matrix at the fibre-matrix interface, and the nature of the fibre-matrix bonding mechanism, were studied via the use of focused ion beam (FIB) cross-sectioning, FIB imaging, scanning electron microscopy, and mechanical peel testing. The results show that the inclusion of the NiTi SMA fibres had a significant effect on the surrounding Al matrix microstructure during the UC process. Additionally, the fibre-matrix bonding mechanism appeared to be mechanical entrapment with the SMA surface showing signs of fatigue from the UC embedding process.