Friction stir processing (FSP) is a solid state route with a capacity of preparing fine grained nanocomposites from metal sheets. In this work, we employed this process to finely distribute TiO2 nanoparticles throughout an Al-Mg alloy, aiming to enhance mechanical properties. Titanium dioxide particles (30 nm) were preplaced into grooves machined in the middle of the aluminium alloy sheet and multipass FSP was afforded. This process refined the grain structure of the aluminium alloy, distributed the hard nanoparticles in the matrix and promoted solid state chemical reactions at the interfaces of the metal/ceramic particles. Detailed optical and electron microscopic studies showed that the microstructural homogeneity was improved with repetition of FSP up to four passes. The average grain size of the nanocomposite was similar to 2 mu m, while nanometric MgO and Al3Ti particles were formed in situ and homogenously distributed in the metal matrix. Mechanical characterisations showed that the yield strength and elongation were increased from 93 +/- 5 MPa and 13.8% to 117 +/- 3 MPa and 25.3% after employing four-pass FSP. Fractographic studies also revealed that agglomerated TiO2 particles could operate as sites of crack initiation and propagation, which led to brittle fracture. By increasing the number of FSP passes, the agglomerates were disappeared and the ductility was enhanced remarkably.