Friction stir additive manufacturing (FSAM) can be potentially used for fabricating high-performance components owing to its advantages of solid-state processing. However, the inhomogeneous microstructures and mechanical properties of the build attributed to the complex process involving restirring and reheating deserve attention. This study is based on the previous research of the underwater FSAMed 7A04 aluminum alloy and adopts a quasi in situ experimental method, i.e., after each pass of the underwater FSAM, samples were taken from the build for microstructural observation to investigate the restirring and reheating effects on microstructural evolution during the underwater FSAM. Fine-grain microstructures were formed in the stir zone during the single-pass underwater FSAM. After restirring, the grain size at the bottom of the overlapping region decreased from 1.97 to 0.87 μm, the recrystallization degree reduced from 74.0% to 29.8%, and the initial random texture transformed into a strong shear texture composed of the C {110}<11¯0>. After reheating, static recrystallization occurred in the regions close to the new additive zones, increasing the grain size and recrystallization degree. This study not only revealed the microstructural evolution during the underwater FSAM but also provided a guideline for further optimization of the mechanical properties of the Al–Zn–Mg–Cu alloy build.