The presence of peripheral coarse grains (PCG) in the microstructure of extruded products is considered one of the causes of decreased mechanical properties. Such microstructure has been observed at the periphery of extruded AZ31 Mg alloy. This research aims to achieve a refined and homogeneous microstructure at the structure of extruded bars of AZ31 alloy using pinless friction stir processing (FSP). Up to six passes of FSP using pinless tools with different shoulder surface geometries were conducted. Tools with varying diameters of 12, 15, and 22 mm were used to investigate the effect of shoulder geometry. The rotational speed and traverse speed of the tool were set at 900 rpm and 70 mm/min, respectively. The tool tilt angle was also set to 3°. The effect of the tool geometry on the metallurgical and mechanical properties was investigated using metallography tests, microhardness testing, tensile testing, and fracture testing. According to the results, it was found that reducing the diameter of the tool and using featured tool can lead to homogenization and reduction of the average grain size in the processed samples, increasing the microhardness compared to the primary sample. It was also observed that mechanical properties were improved with the increase in the tool diameter due to the improved quality of the processing area. For samples processed with a 22 mm diameter tool, the final strength reached 242.7 and 248.81 MPa, respectively, for the simple and featured tools.