<p>Aluminum matrix composites (AMCs) have garnered increasing attention as advanced structural materials due to their outstanding mechanical properties, including high specific strength, excellent wear resistance, and favorable thermal conductivity. However, conventional fabrication techniques often lead to undesirable interfacial reactions and reinforcement particle segregation, thereby compromising composite performance. Friction Stir Processing (FSP) has emerged as a promising solution to these limitations by enabling microstructural refinement and uniform dispersion of reinforcement particles without melting the base metal. This review systematically investigates the impacts of FSP on microstructure evolution, mechanical properties, tribological behavior, and corrosion resistance of AMCs, with particular emphasis on the influence of processing parameters and types of reinforcement. FSP induces intense plastic deformation and dynamic recrystallization, resulting in significant grain refinement and enhanced homogeneity, thereby improving tensile strength, hardness, and fatigue resistance. The incorporation of reinforced particles contributes to superior mechanical and wear performance. Moreover, hybrid reinforcements demonstrate synergistic effects, offering enhanced multifunctionality compared to single-reinforced counterparts. Despite these advancements, challenges such as particle agglomeration and occasional deterioration in corrosion resistance highlight the need for further optimization. Future research should focus on interface engineering, the development of multifunctional composites, and the integration of computational modeling to fully realize the potential of FSP in fabricating high-performance AMCs for aerospace, automotive, and marine applications.</p>