The increasing demand for materials possessing enhanced mechanical strength, high thermal conductivity, and excellent electrical properties has grown significantly. Cu-matrix composites, especially Cu– Ni, present a promising candidate to fulfill these demands. In this study, Cu–Ni composites were successfully synthesized using powder metallurgy with various additions (0–1.5 wt%) of Yttria (Y2O3)-reinforcement aiming to enhance their mechanical, thermal, and electrical properties. The microstructural investigations demonstrated a uniform distribution of Y2O3 particles and a slight increase in porosity of the Cu–Ni matrix. The Cu–Ni composites with 1.5 wt% Y2O3 showed the presence of Cu2NiZn intermetallic compounds, potentially harming their physical and mechanical properties. Y2O3-reinforcement significantly increased the hardness and led to a moderate rise in the yield and ultimate compressive strengths. The results indicated that the Cu–Ni matrix without Y2O3-reinforcement had the highest coefficient of thermal expansion, which decreased with the addition of Y2O3, potentially leading to improved thermal properties of Cu–Ni composites. This study puts an emphasis on the importance of Y2O3 particles dispersion and on the extent of porosity in enhancing the thermal and mechanical properties of Cu–Ni composites.