Friction stir processing (FSP) is emerging as a singular solid-state surface engineering technique to fabricate surface composites (SC) since its adaption from Friction Stir Welding (FSW) from the early 90s. FSP is a promising technique to overcome the barrier of magnesium being a poor material in terms of wear and corrosion resistant without adding much on the processing cost and thus, widen its applications.The targeted property enhancement by forming surface composites via FSP are strength, ductility, hardness, wear resistance, toughness, fatigue life, formability, corrosion resistance, etc. Although, a decade of research work has been carried out on FSP for different metal alloys, the advantages of the process particularly on magnesium alloys is yet to be understood clearly. The present review is focused on understanding the response of magnesium alloys for friction stir processing to fabricate surface composites. The available literatures have been thoroughly reviewed to present the microstructure evolution during processing and the mechanism of strengthening; the works on magnesium has been summarized to understand the effect of various processing parameters such as tool speed (rotation and traverse), number of passes, etc. and the tool geometry on the resulting properties. Also, details regarding the selection of suitable tool material and reinforcing particles to achieve optimum properties for specific magnesium alloys is included. Important suggestions and scope for further research regarding fabrication of surface composites on magnesium alloy are provided.