Multipass friction stir processing (FSP) technique was used to get inhomogeneous layered microstructure in Al 5086 alloy. Different proportions of fine and coarse grain microstructures were generated using FSP. In the present work, material with inhomogeneous layered microstructure generated using FSP was subjected to deformation at temperature of 500°C and at strain rate in the range of 5×10-4 to 1×10-2 s-1. It was observed that the inhomogeneous layered microstructure with more than 50% fine grain microstructure is required to get higher elongation to failure. However material having homogeneous fine grain microstructure showed lower elongation to failure than the material having both fine and coarse grain microstructures. By varying the proportion of fine and coarse grain microstructures higher ductility was obtained at higher strain rate as compared to a material with homogeneous microstructure. It is clear that materials with inhomogeneous microstructure are not following “rule of mixture” type of behaviour.