The objective of this article is to provide a review of friction stir processing (FSP) technology and its application for microstructure modification of particle reinforced composite materials. The main focus of FSP was on aluminum based alloys and composites. Recently, many researchers have investigated this technology for treating other alloys and materials including stainless steels, magnesium, titanium, and copper. It is shown that FSP technology is very effective in microstructure modification of reinforced metal matrix composite materials. FSP has also been used in the processing and structure modification of polymeric composite materials. Compared with other manufacturing processes, friction stir processing has the advantage of reducing distortion and defects in materials. The layout of this paper is as follows. The friction stir processing technology will be presented first. Then, the application of this technology in manufacturing and structure modification of particle reinforced composite materials will be introduced. Future application of friction stir processing in energy field, for example, for vanadium alloy and composites will be discussed. Finally, the challenges for improving friction stir processing technology will be mentioned.