Friction stir spot welding (FSSW) has emerged as a viable alternative to resistance spot welding (RSW) for joining dissimilar metals like aluminum and steel, effectively addressing challenges associated with heat transfer disparities and thick intermetallic compound (IMC) formation. However, the issue of exit holes left by the withdrawing tool in FSSW can lead to stress concentrations and reduce joint durability. This study introduces an innovative exit hole refilling technique, utilizing Fe–Zn powder, which is consolidated through a pinless tool to improve weld integrity. The refilled joints were evaluated using metallographic analysis, elemental mapping, and shear-tensile testing to assess surface morphology, material distribution, and mechanical strength. Results demonstrated that the Fe–Zn powder refilling technique significantly enhances joint surface morphology and mitigates stress risers. The study confirms that optimized FSSW, combined with exit hole refilling, can provide superior performance in dissimilar metal joints, making it suitable for demanding applications in automotive and industrial settings.