Vertical compensation friction stir welding (VCFSW) is successfully applied to weld 7N01-T4 aluminum alloy, and effects of welding speed on joint quality are investigated. The results show that when compensation strip width is 1 mm, the defect-free joint is obtained at the welding speed of 50 mm/min and constant rotational velocity of 2000 rpm. Moreover, the intercalation lamellae structure formed in nugget zone (NZ) can reveal material flow behavior clearly. As strip width increases to 1.5 mm, it is difficult to attain sound joint. Decreasing welding speed is beneficial to surface formation of VCFSW joint. The increase of welding speed decreases tensile strength and elongation of joint. At the welding speed of 50 mm/min and strip width of 1 mm, the tensile strength and elongation of VCFSW joint are 295.7 MPa and 6.7 %, equivalent to 66 and 39.4 % of BM, respectively, while fracture surface of joint presents typical ductile fracture. The hardness distribution of joint shows typical W shape, and the hardness of NZ exhibits uniform distribution.