AZ91 casting alloy is subjected to friction stir processing (FSP) in air (NFSP) and under water (SFSP). The thermal histories of the two FSP procedures are measured, and their effects on microstructure evolution and mechanical properties of the experimental materials are investigated. Compared with NFSP, the peak temperature during SFSP is about 150 A degrees C lower and a much higher cooling rate of 13 A degrees C/s is gained. Both NFSP and SFSP produce uniform recrystallized microstructures with dominant high-angle grain boundaries. The average grain size of the NFSP specimen is 7.8 mu m, and SFSP results in further grain refinement with a grain size of 1.2 mu m. The observed grain sizes of the two FSP specimens match well with the predicted values calculated by the Derby-Ashby model. TEM observation, temperature data, and model criterion indicate that the grain refinement mechanism during NFSP is attributed to continuous dynamic recrystallization (DRX), while continuous DRX and discontinuous DRX affect during SFSP. The mechanical properties of the SFSP alloy are much higher due to finer microstructure.