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Billets from an AA4032 alloy are usually produced by direct-chill (DC) casting to subsequently manufacture piston components by hot forging process. This work presents the effect of combined copper (Cu) and erbium (Er) addition on microstructure, mechanical properties and thermal expansion of an AA4032 alloy at room and elevated temperatures. Metallographic examination of samples was carried out to characterize the eutectic refinement, primary Si particles and second phase formation at different levels of Cu and Er additions. The results revealed that the amount of primary Si particles increased with increasing Cu addition from 1% to 3.5%. This indicated that Cu addition shifted the eutectic point in the alloy system. However, the Er addition resulted in complete elimination of primary Si particles and refinement of eutectic silicon phases. These results were supported by Thermo-Calc calculations. With increasing Cu and Er concentration to 3.5% and 0.4%, respectively, the hardness increased from 116 HB to 144 HB. The ultimate tensile strength (UTS), yield strength (YS) and elongation (El) were investigated at both room and elevated temperatures. At room temperature, the UTS of these alloys were enhanced with Cu and Er alloying from 279 MPa to 312 MPa. At 350 °C, the UTS was improved to 117 MPa while El was maintained at about 22%. This indicated that Er addition was effective in optimizing the high-temperature properties. The tensile fracture surfaces of the specimens showed that the main failure mechanism was predominantly due to the cracking of primary Si particles in the Al matrix, resulting in the brittle fracture of the alloys without Er. The fracture surface of the samples with Er addition displayed the path through the refined eutectic phase in the ductile fracture mode. The coefficient of linear thermal expansion (CTE) decreased to about 18.3 × 10−6 K−1 at high operating temperature (100–350 °C) for the Er containing alloy. Therefore, this study suggests that the combination of Cu and Er additions in an AA4032 alloy controls the beneficial microstructure in terms of primary Si particles, the refined eutectic Si phase and secondary phases in the Al matrix, which improves mechanical and thermal performances. The low coefficient of linear thermal expansion (CTE) of this alloy makes it suitable for elevated temperature applications.