Friction welding was chosen for its versatility in the joining of dissimilar materials with high quality. The aim of this study is to determine the optimal welding conditions for attaining quality joints by using online monitoring of acoustic emission system signals. During friction welding, the formation of cracks, defects, or any abnormalities in the joining process which have a detrimental effect on the joints quality was identified. The most widely used materials in the aerospace industry—Inconel 718 and molybdenum steel—were joined by friction welding. The precision of the joints, internal defects, and quality are major concerns for aerospace parts. The results of the present research determined the optimal welding conditions for high tensile strength by nondestructively inducing acoustic emission signals. During friction time and upset time periods, the typical waveforms and frequency spectrum of the acoustic emission signals were recorded, and their energy level, average frequency, cumulative count, and amplitude were analyzed. Both cumulative count and amplitude were found to be useful parameters for deriving the optimal welding conditions. In the initial stage of friction welding, a very high voltage of continuous form was generated with frequency characteristics of 0.44 MHz and 0.54 MHz. The signals generated during the upset stage had a low voltage, but a very high frequency of 1.56 MHz and 1.74 MHz with a burst-type signal. The amplitude of the signal generated for the optimally welded joints was about 100 dB at the friction time and about 45 dB at the upset time.