This study focused on fortifying the AZ91 magnesium-based alloy with Ni–Al2O3 particles using the friction stir process. The resultant AZ91–Ni–Al2O3 composite exhibited a crack-free surface with uniform distribution, showcasing strong interfacial bonding. At 500× magnification, the composite displayed 3213.65 grains per square inch. It demonstrated a 51.75% increase in tensile strength and a 45.76% rise in hardness. The introduction of 2 wt-% Ni–5 wt-% Al2O3 led to a remarkable 76.92% reduction in the wear rate. The composite exhibited a coefficient of friction measuring 0.312. X-ray diffraction (XRD) analysis confirmed the presence of Mg, Mg2Al3, Ni and Al2O3. AZ91/5 wt-% Al2O3/2 wt-% Ni composite finds utility in diverse industries in manufacturing components for aerospace, automotive and structural applications.