The effect of ZrO2(2, 4, 6 and 8 wt%) dispersoids with 1 wt% graphite on the microstructural, mechanical properties on squeeze cast VAL12 matrix hybrid composite is investigated in the present study. The hybrid composites were characterized using advanced characterization techniques to reveal its microstructural and physical properties. The microscopic examinations using optical and SEM technique reveal that the addition of dispersoids accelerates the nucleation kinetics, thus attaining fine, equiaxial grains in hybrid composites. The squeeze cast composites show almost nil porosity, defects and owing to it, the actual density of the composites are found to be more than 95% as that of the theoretical density values. The hardness values and tensile values increase with respect to the increase in percentage addition of ZrO2. The tensile results show that there is an appreciable increase in the UTS values of composites without much loss in its ductility as the addition of graphite improves the self-lubricating property and provides wettability during the casting. Fractographic studies on tensile tested specimen reveal that the crack occurs in both matrix and particles showing the good interface between matrix and dispersoids. Machinability studies reveal the formation of continuous chips in hybrid composites with a lower percentage of reinforcement (up to 4% ZrO2+ 1%Gr) and segmented chips in case of the composite with 8% ZrO2+ 1%Gr, as the increase in the percentage of dispersoids improve the chip breakability of the composites. On an overall, the hybrid aluminium matrix composites with 1%Gr and 6 % ZrO2unveiled better optimal results.