In this research, development of Al356/Al 2 O 3 surface nanocomposite by friction stir processing (FSP) method was investigated. For this purpose, first tool shape and geometry and FSP parameters were optimized by examining the samples prepared at a variety of process parameters microstructurally using both optical and scanning electron microscopy. The optimum value of tool rotation rate, traverse speed and the suitable tilt of the spindle towards trailing direction were found 1600rpm, 200mm/min and 2?, respectively. Then Al356/Al 2 O 3 composite powders were prepared by mechanical milling of Al356 chips and 5vol. % micro and nanoscaled alumina particles. The milled powders were used as feedstock to deposit composite coatings on Al356-T6 substrate using high velocity oxy-fuel (HVOF) process. Finally the aluminum plates with preplaced composite layers were subjected to FSP. With the optimized tool design and processing parameters, composite layers of ~5mm, with well distributed particles and a good bonding with the aluminum substrates, was generated. X-ray diffractometery, optical and scanning electron microscopy, microhardness, nanoindentation and wear tests were used to characterize the composite powders, coatings and surface composites. Friction stir processing of Al356 resulted in the significant breakup of coarse acicular Si particles and coarse primary aluminum dendrites, the closure of casting porosities, and the uniform distribution of broken Si particles having an average size of 5–10 ?m and an average aspect ratio of ~2 in the aluminum matrix. Results indicated that, the presence of Al 2 O 3 in matrix can improve the mechanical properties of specimens. The mechanical performances of nanoparticle reinforced composites were far superior to those of microparticle strengthened composites with a similar volume content of particulate. It was found that the hardness and elastic modulus of surface nanocomposite were about 110Hv and 86GPa. Surface composites revealed low friction coefficients and wear rates, which were significantly lower than those obtained for substrate. The wear mass loss of the base metal, FSP, surface micro and nanocomposite specimens after 500m sliding distance were 50.5mg, 55.6mg, 31mg and 17.2mg, respectively. Scanning electron microscopy tests revealed different wear mechanisms on the surface of the warn test specimens.