Composite materials possess advantages like high strength and stiffness with low density and prove their essentiality in the aviation sector. Aluminium metal matrix composites (AMMC) find applications in automotive, aircraft, and marine industries due to their high specific strength, superior wear resistance, and lower thermal expansion. The fabrication of composites using the liquid phase at high temperature leads to the formation of intermetallics and unwanted phases. Friction Stir Processing (FSP) is a novel technique of composite fabrication, with temperature below the melting point of the matrix, achieving good grain refinement. Many researchers reported enhancement of mechanical, microstructure, and tribological properties of AMMC produced by the FSP route. The FSP parameters such as tool rotational speed, tool traverse speeds are found to be having greater impact on uniform dispersion of particles. It is observed that the properties such as tensile strength, hardness, wear and corrosion resistance, are altered by the FSP processes, and the scale of the alterations is influenced significantly by the processing and tool parameters. The strengthening mechanisms responsible for such alterations are discussed in this paper. Advanced engineering materials like shape memory alloys, high entropy alloys, MAX phase materials and intermetallics as reinforcement material are also discussed. Challenges and opportunities in FSP to manufacture AMMC are summarized, providing great benefit to researchers working on FSP technique.