Friction Stir Back Extrusion (FSBE) is a new grade of severe plastic deformation process capable of producing metallic tubular geometries that exhibit ultrafine grain structure and superior mechanical properties. FSBE of tubular sections provide opportunities for producing lightweight rigid structures for the automotive, aerospace and construction industries. This research investigates the effect of submerging conditions (in water at 25 °C and 2 °C) for Magnesium AZ31-B tubes on the grain size, mechanical properties, temperature history and power consumption. Submerged FSBE is compared to FSBE in air at fixed process parameters of 90 mm/min and 2000 rpm. It is shown that the impact of submerging is statistically insignificant in terms of the mechanical properties, ultimate tensile strength and percent elongation, of the produced tubes according to the conducted t-tests. On the other hand, the optical microscopy results indicated finer grains at the inner wall of the seamless tubes for FSBE in air and underwater FSBE at 25 °C when compared to underwater FSBE at 2 °C.