In this study, a detailed investigation on the effect of heat treatment on the microstructural characteristics, texture evolution and mechanical properties of Mg–(5·6Ti+2·5B4C)BM hybrid nanocomposite is presented. Optimised heat treatment parameters, namely, heat treatment temperature and heat treatment time, were first identified through grain size and microhardness measurements. Initially, heat treatment of composites was conducted at temperature range between 100 and 300°C for 1 h. Based on optical microscopic analysis and microhardness measurements, it was evident that significant grain growth and reduction in microhardness occurred for temperatures >200°C. The cutoff temperature that caused significant grain growth/matrix softening was thus identified. Second, at constant temperature (200°C), the effect of variation of heat treatment time was carried out (ranging between 1 and 5 h) so as to identify the range wherein increase in average grain size and reduction in microhardness occurred. Furthering the study, the effect of optimised heat treatment parameters (200°C, 5 h) on the microstructural texture evolution and hence, on the tensile and compressive properties of the Mg–(5·6Ti+2·5B4C)BM hybrid nanocomposite was carried out. From electron backscattered diffraction (EBSD) analysis, it was identified that the optimised heat treatment resulted in recrystallisation and residual stress relaxation, as evident from the presence of ∼87% strain free grains, when compared to that observed in the non-heat treated/as extruded condition (i.e. 2·2 times greater than in the as extruded condition). For the heat treated composite, under both tensile and compressive loads, a significant improvement in fracture strain values (∼60% increase) was observed when compared to that of the non-heat treated counterpart, with ∼20% reduction in yield strength. Based on structure–property correlation, the change in mechanical characteristics is identified to be due to: (1) the presence of less stressed matrix/reinforcement interface due to the relief of residual stresses and (2) texture weakening due to matrix recrystallisation effects, both arising due to heat treatment.