This study was carried out to grow an understanding of the microstructural development of friction stir welding on an AZ91D magnesium alloy and to evaluate the mechanical properties of the welds. AZ91D plates with the thickness of 4 mm were used, and the microstructural development of the weld zone was investigated using optical and scanning electron microscopes. Square butt welded joint with good quality was obtained under 187 mm/min of travel speed with the tool rotation speeds range of 115 to 131 rad·s−1. The microstructure near the welds consisted of SZ (Stir Zone) which has fine equiaxed grains with no the original dendrite grain structure, TMAZ (Thermo-Mechanically Affected Zone), HAZ (Heat affected zone) and base metal. The microstructure of each zone showed very different features depending on the thermal and mechanical conditions. The hardness tests showed uniform distributed and slightly increased harness in the stir zone. Tensile strength of the stir zone was remarkably improved due to the fine recrystallized grain structure.