The major attention of the automotive, aerospace, and marine industries currently is towards light-weight structural parts, and this can be achieved by the use of the tailor-welded blanks (TWBs). Using Al alloys as a member of the TWBs lessens the structural weight further, but conventional fusion welding of these alloys is often associated with defects such as porosity, manifestation of segregation and under-fill formation. Friction stir welding (FSW) is a feasible approach not only for producing welds with minimal defects but also for their enhanced formability, which finds extensive applications across industries. Due to its capability of completely negating the rolling directional properties of the as-received sheet, FSW increases the uniformity in the strain distribution during the course of deformation. In the present study, the objective was to perform FSW for dissimilar materials (with advancing side AA6061 and retreating side AA5754 sheets) with a similar thickness of 1.5 mm and to investigate the formability behavior of the TWBs. The effect of different FSW process parameters like rotational speed (950 rpm, 1100 rpm, 1250 rpm, and 1400 rpm) and traverse speed (50 mm/min, 75 mm/min, and 100 mm/min) which were selected based on visual inspection and macrostructure studies of the welds, was investigated on the formability and mechanical behavior of welded AA6061 and AA5754 sheets. Tensile tests were performed for base materials along with the specimens welded at different process parameters according to ASTM E8 standard to evaluate the mechanical properties. Micro-hardness tests were performed at several locations of the cross-section in the transverse direction to the weld in either side. The assessment of formability was executed by deforming the as-received and welded specimens in uniaxial strain paths, plane strain paths, and biaxial strain paths using Limit Dome Height (LDH) tests. Tensile test evaluation of 1250 rpm–50 mm/min, 1250 rpm–75 mm/min, 1400 rpm–50 mm/min, and 1400 rpm–75 mm/min parameter combinations exhibited cracks away from the weld center towards the advancing side (AA6061 side) of the specimens, indicating good quality of the welds, which was in agreement with the stir zone macrostructures. The micro-hardness distribution plots also showed a drop in the hardness in the TMAZ of the advancing side, making it the weakest region of the weld. It has been observed from the LDH test that the formability of all the FSWed specimens was intermediate to the formability of AA5754 (superior formability) and AA6061 (inferior formability), irrespective of the strain paths that might be correlated to their corresponding strain hardening exponents. In the case of uniaxial and plane strain paths in the welded specimens, the failure was towards the advancing side, which was in agreement with the tensile properties, but in the case of biaxial stretching, it was failing at the weld center due to their corresponding microstructural characteristics. An abnormal behavior was witnessed in the equibiaxial stretching, i.e., the minor strain attained for all the welded specimens was significantly less. Comprehensive studies on microstructure and microtexture were performed on the un-deformed and deformed specimens to investigate the peculiar behavior, and it was inferred that the initial local misorientations play a pivotal role in determining the grain orientation spread (GOS) post-deformation. It was further observed that the average GOS values were analogous across all the deformed welded samples in their respective strain paths. It's noteworthy that the presence of the Cube texture component in the biaxial strain path significantly mitigated the impact of the Goss texture, resulting in the peculiar behavior i.e. a notable decrease in the minor strain observed in the deformed welded specimens in the biaxial strain path.