AE 42 is rare earth containing magnesium alloy which was developed for creep resistance and automobile applications. This alloy was subjected to friction stir processing and the effect of processing parameters on the properties was studied in detail. Mechanical and metallurgical properties of stir zone were evaluated and compared with parent metal. Thermal cycling of stir zone was carried out to study the stability of it at high temperature. Due to processing, stir zone microstructure was refined to 5 micron. The second phase inter-metallic particles Mg17Al12, Al11Ce3 and Al2Ce were refined to tiny pieces of 1-2 micron and evenly distributed in the matrix. The stir zone was stable up to 250°C during thermal cycling. Mechanical properties of friction stir zone were superior to parent metal. © (2013) Trans Tech Publications, Switzerland.