Based　on　the　co-dispersion　behavior　of　CNT　and　graphene,　an　effective　two-step　process,　from　water-based　to　ethanol-based,　for　dispersing　CNT　was　developed.　The　magnesium　matrix　composites　reinforced　with　the　dispersed　CNT　(D-CNT)　were　fabricated　via　powder　metallurgy　along　with　hot　extrusion.　Results　indicated　that　CNT　were　complexed　with　graphene　by　the　7C-7C　stacking　interactions　and　the　dispersion　of　CNT　in　water　and　ethanol　relied　on　electrostatic　repulsion　and　steric　hindrance,　respectively.　The　uniformly　distributed　D-CNT　with　the　intact　structure　embedded　into　Mg　matrix,　forming　the　interfacial　bonding　with　sandwich　structure　or　embedded　structure.　The　thermal　conductivity　of　the　1.0　wt%　D-CNT/Mg　composite　was　reached　up　to　187.7　W/　(mK),　42.2%　higher　than　that　of　pure　Mg.　The　enhancement　of　thermal　conductivity　was　ascribed　to　the　multi　tunnel　effect　of　the　D-CNT　and　the　sandwich　structure　and/or　embedded　structures　interface.