In this work, an investigation was conducted into the microstructure and mechanical characteristics of friction stir processed aluminum matrix composites (AMCs) reinforced with exfoliated graphite nanoplatelets (xGnPs). The microstructure was characterized using X-ray diffraction (XRD), electron backscattered diffraction (EBSD) and transmission electron microscopy (TEM), respectively. In addition, microhardness and tensile tests were performed to evaluate the differentiation of mechanical properties for all the samples. Field emission scanning electron microscopy was employed to reveal the fractographic features of all the samples. The results illustrated that the grains of the AMCs consist of equiaxed crystals with an average grain size of 3.2 µm, forming an ultrafine-grained microstructure. Additionally, the ratio of high angle grain boundaries in AMCs was higher than that of FSPed sample. The mechanical performance of AMCs was improved significantly as a result of Al4C3 generated in the solid-phase chemical reaction between the xGnPs and the Al matrix during FSP in combination with the fine grain strengthening. The microhardness, yield strength and ultimate tensile strength of AMCs reached 80 HV, 110 MPa and 210 MPa, respectively, which were 47, 69 and 20% higher than those of the base metal, respectively. The preferred orientation of the base metal transformed from < 200 > toward < 111 > , < 220 > and < 311 > owing to the combination effect of FSP and xGnPs. The incorporation of xGnPs ameliorated the mechanical properties of the AMCs dramatically, and the fracture surface of the AMCs was indicative of a combined ductile–brittle failure behavior.