This work focuses on the effect of high pressure torsion (HPT) on the thermostability, microstructure, mechanical properties and electrical conductivity of an Al-8.5. wt.% RE (RE stands for rare earth Ce and La in the present case) alloy with respect to its potential application in electrical engineering. HPT processing leads to the formation of a very homogeneous ultra-fine grained microstructure resulting from the fragmentation of RE-rich intermetallic particles down to the nanoscale. Deformation induced supersaturated solid solution of RE atoms in the Al matrix is demonstrated for the first time. The HPT processed material shows an extraordinary high mechanical strength attributed to the high volume fraction of nanoscaled intermetallic particles and the ultrafine grained (UFG) microstructure. The various strengthening contributions were analyzed, and it was shown that the increase of strength during short time annealing could be attributed to the clustering of RE atoms in solid solution. The HPT processing induces a significant reduction of the electrical conductivity, but it was partly restored by annealing thanks to the concomitant clustering of RE atoms, reduction of dislocation density and grain growth. The potential applications of UFG Al-RE alloys in electrical engineering are finally discussed.