This research reveals the critical role of basal slip in the substructure development during friction stir processing of a magnesium alloy. In this respect, the intragranular lattice rotation axes are considered to identify the activity of different slip systems. The applied shear strain during the procedure is stored in the matrix through slip‐induced rotations at the grain level. The rotations around distinct Taylor axes produce “slip domains” separated by necessary boundaries from the parent grains, significantly contributing in grain refinement. The basal slip is easily activated in grains holding different stored energy; however, the nonbasal slip has a higher dependency on the amount of local applied strain. Determining the contribution of different slip systems in strain accommodation reveals that the basal slip imposes the highest fraction of low‐angle boundaries into the microstructure leading to the development of the ultimate grain boundary structure.