In some applications the stress across the entire cross-section of a component is not uniform but varies with position. For example, maximum shear stress is highest at the inner surface of a thick-walled cylinder subjected to uniform internal pressure and it decreases continuously towards the outer surface. In such applications it would be more appropriate for the component, too, to have varying strength across the cross-section matching with the stress profile it is subjected to. The present work deals with obtaining such a functionally graded material (FGM), characterizing it and testing its mechanical properties in compression. Differential aging heat treatment was used to produce the functionally graded material in a precipitation hardenable Al-4.6%Cu alloy by changing the microstructure. Temperature gradient furnace was used to achieve the gradation in microstructure from one end of the sample to the other end by differential aging of the solution treated sample. Mechanical properties can be varied in any precipitation hardenable alloy by means of producing various precipitates, which will form during the aging sequence. In Al-4.6%Cu alloy one end of the solution treated sample was aged for 38 hours at 170°C and the other end at 70°C by means of a temperature gradient furnace in which the coil density varies along the axis of the furnace. Thus we achieved a difference in mechanical properties from 70°C side to 170°C side as the precipitation during differential aging varied from GP zones at one end to θ' precipitate at the other end. Characterization was done on isothermally aged samples and in FGM using XRD (X-ray diffraction) and TEM (Transmission Electron Microscopy). XRD result showed that the final equilibrium precipitate θ was not formed in any of the heat-treated samples. TEM result showed the various precipitation sequences from GP zones to θ' in the isothermally aged samples and the same was confirmed in the gradient sample by cutting the samples form 70°C side towards the 170°C side and doing TEM on each sample. The properties of FGM in compression were studied using a 9mmx9mmxl8mm-compression sample using DARTEC machine and it was compared with those of isothermally aged samples. For 70°C the 0.2% proof stress was 141MPa and for 170°C it was 226MPa. The corresponding ductility values at the point of inflection on the engineering stress-strain curve for 70°C sample was higher (33%) than the 170°C (22%) sample. For the gradient sample it gave a proof stress of 163MPa and a ductility value of 30%.