Dynamic deformation behavior of monolithic metallic materials at high strain rates has been extensively studied and reported in the literature. Strain localization along shear bands at the final stage of deformation as a result of intensive localized adiabatic heating is a commonly occurring phenomenon that can cause fragmentation in a catastrophic manner. In this study, the effects of particulate reinforcement on the phenomenon of adiabatic heating leading to strain localization in Aluminum 6061-T6 alloy under high velocity impact is investigated. Results of our investigations show that reinforcing the aluminum alloy with alumina particles increases its strength and stiffness. However, the susceptibility of the aluminum alloy to strain localization and adiabatic shear failure increases with particulate reinforcement. In addition, the particulate reinforcement leads to systematic cracking of the surface of the impacted test specimens. Although the geometry of the surface cracks is similar in all cases, the number of such cracks depends on volume fraction of the particulate reinforcement as well as on impact momentum.