Friction stir processing (FSP) is emerging as an effective tool for microstructural modification and property enhancement. As-cast AZ91 magnesium alloy was friction stir processed with one-pass and two-pass to examine the influence of processing conditions on microstructural evolution and corresponding mechanical properties. Grain refinement accompanied with development of strong basal texture was observed for both processing conditions. Ultrafine-grained (UFG) AZ91 was achieved under two-pass FSP with fine precipitates distributed on the grain boundary. The processed UFG AZ91 exhibited a high tensile strength of ∼435 MPa (117 pct improvement) and tensile fracture elongation of ∼23 pct. The promising combination of strength and ductility is attributed to the elimination of casting porosity, and high density of fine precipitates in an UFG structure with quite low dislocation density. The effects of grain size, precipitate, and texture on deformation behavior have been discussed. © 2013 The Minerals, Metals & Materials Society and ASM International.