AZ91 alloy, the most widely used Mg casting alloy, exhibits low strength/ductility and weak energy absorption, which is a function of its large grain size and the presence of a coarse and continuous network of β-Mg17Al12 intermetallic compounds. This work demonstrated that friction stir processing (FSP) enables enhancement of strength and energy absorption capability of AZ91 alloy. The influence of FSP treatment on various potential strengthening mechanisms, including grain boundary, solid solution, and sub-micron particle strengthening mechanisms, was studied. It is identified that the grain boundary strengthening plays a significant contribution to the strength of the FSP treated AZ91. FSP treatment altered the failure mechanism of the alloy from brittle cleavage-dominant mode to ductile dimple-dominant mode, which can increase the potential of cast Mg alloys to use in the safety-critical application. The significant improvement in energy absorption capability is a function of grain refining and the formation of ultra-fine sub-micron Mg17Al12 particles. The trends in mechanical properties of AZ91 treated by various severe plastic deformation approaches are disused.