<p>Magnesium alloys (Mg alloys) are lightweight materials with an excellent strength-to-weight ratio, making them ideal for applications in the automotive, aerospace, and biomedical industries. However, their widespread use is limited by poor formability and high corrosion rates. Friction stir processing (FSP) is a new solid-state surface treatment technology to enhance the properties of Mg alloys by refining and homogenizing the grain structure, improving mechanical properties, and enabling incorportion of reinforcement particles to produce composites. This review article critically assessed microstructural development, mechanical characteristics, wear resistance, and corrosion behavior of magnesium-based surface composites created by FSP. Process parameters, reinforcement materials, and defect analysis are explained to highlight the efficiency of FSP in producing high-performance magnesium composites. The article also presents existing challenges and future outlook for the development of FSP technology for industrial and aerospace applications.</p>