TiAl-5wt.%Ti₂AlC-3wt.%Mn composites reinforced by the addition of Mn and in situ synthesized Ti₂AlC nanoparticles with a novel microstructure were fabricated. The microstructure and compressive properties of the fabricated composites were thoroughly investigated. The interface between the nanoparticles and the TiAl matrix maintained a very small mismatch and exhibited a stable combination, leading to noticeable grain refinement in the fabricated composites. Furthermore, the yield strength, maximum compressive strength, fracture strain, and strength-ductility balance of the TiAl-5wt.%Ti₂AlC-3wt.%Mn composites increased by 30.7%, 10.1%, 5.5%, and 9.9%, respectively, compared with those of the TiAl alloy. The mechanisms by which the properties of the composites were improved mainly thermal mismatch strengthening, Orowan strengthening, grain refinement strengthening, and solid solution strengthening.