The ever-increasing demand for high performance materials in all walks of life encouraged researchers to develop composites with excellent mechanical properties. Reinforcing the Mg alloys with carbonaceous nanomaterials are progressively in focus due to their superb performance. The present research fabricated the composites by as-rolled Mg–2.97 wt%Al–1.02 wt%Zn–0.34 wt%Mn (AZ31) alloy and graphene (GNP) through one-pass friction stir processing (FSP). For comparison with the GNP enhancement in composites, different passes FSPed AZ31 alloys were also prepared, respectively. The microstructure and mechanical properties of the investigated materials were analyzed by optical microscopy (OM), scanning electron microscopes (SEM), electron backscatter diffraction (EBSD), transmission electron microscope (TEM), and tensile tests. The average grain size of the one-pass FSPed AZ31 alloys (9.23 μm) is smaller than the basal metal (BM) (47.8 μm). With the increasing passes of FSP, the average grain size decreased, and basal texture became stronger, which resulted in the rising comprehensive mechanical properties of the FSPed AZ31 alloys. The GNP/AZ31 composite displayed a good ultimate tensile strength (UTS) (220 MPa). The elongation (29%) of the GNP/AZ31composite increased by 202% compared with the BM (9.6%). This is attributed to grain refinement by FSP and strengthening effects of GNP. The TEM results show that GNP was uniformly dispersed in the BM, which benefits the formation of load transfer. Thus high performance GNP/AZ31 composites are obtained.