Microstructure evolution of an Al-0.4Zr(wt.%) alloy after isothermal aging (AG) and subsequent high pressure torsion (HPT) and its impact on strength and electrical conductivity has been investigated. Microstructure was characterized by X-ray diffraction, electron backscatter diffraction, transmission electron microscopy (TEM) and electron energy-dispersive X-ray spectroscopy in TEM. The initial Al-0.4Zr(wt.%) alloy obtained by combined casting and rolling presents solid solution of Zr in Al matrix. Aging at 375 degrees C for 60 h leads to formation of uniformly distributed metastable Al3Zr precipitates with the average diameter of 13 nm, resulting thereby in a decrease of strength. sigma(UTS) from 128 to 95 MPa and in increase of conductivity from 50.7 to 58.8% IACS at ambient temperature. The subsequent HPT processing leads to grain refinement and partial dissolution of the Al3Zr precipitates that is accompanied by enrichment of solid solution by Zr atoms and by coarsening of the remaining Al3Zr precipitates. The combination of AG and HPT provides the strength and the conductivity at ambient temperature which do not decrease under annealing up to 230 degrees C. Moreover, additional strengthening accompanied by an increase in conductivity was found for AG-HPT samples after annealing at T-an=230 degrees C for 1 h, that provides the best combination of the strength of. sigma(UTS)=142 MPa and the conductivity of 58.3% IACS. Contribution of different possible mechanisms into strength and charge scattering are analyzed on the basis of specific microstructural features. The analysis indicates a suppression of strengthening by the Orowan mechanism in AG and AG-HPT samples. In all the studied states, i.e. initial, after AG, and subsequent HPT, grain boundary strengthening is found to be the main strengthening mechanism.