Flow behaviour and concurrent microstructural evolution during superplastic deformation of the Al-Cu eutectic alloy were investigated in the temperature range 400-540°C. When deformed at strain rates up to 10-4 s-1, strain hardening occurs, which is accompanied by grain growth and cavitation at all temperatures. The observed strengthening can be explained only partly by grain growth. The presence of relatively large cavities surprisingly contributes to strengthening, following the Hall-Petch type relationship between stress and mean free path between cavities. This anomaly is attributed to plastic deformation of the intercavity regions at enhanced strain rates, in analogous to microtensile specimens. An experimental constitutive relationship for cavitation and a modification for flow behaviour are proposed.