In this study, parent aluminum (Al), silicon carbide (SiC) reinforced Al, zirconia (ZrO2) coated SiC reinforced Al, and lithium zirconate spinel (Li2ZrO3, LZO) encapsulated SiC incorporated Al metal matrix composites were processed via friction stir processing (FSP) technique to observe the influence of grain refinement on mechanical and damping properties. Electron backscattered diffraction (EBSD) analysis were conducted for detailed and deep understanding of possible mechanism and microstructure at longitudinal cross sections of the samples. Further, the room temperature mechanical properties and thermal cyclic (−100 to 400 °C) damping performance of the friction stir processed composites were studied. The results obtained in this investigation show that storage modulus of pristine Al, SiC reinforced Al, ZrO2 coated SiC reinforced Al, and LZO coated SiC reinforced Al were improved by a factor of 1.09, 1.17, 1.09, and 1.38, respectively, after FSP. Additionally, the ultimate tensile strength (UTS) and hardness of the friction stir processed SiC/Li2ZrO3/Al composite were improved by a factor of 1.08 and 1.11, respectively, after FSP was compared with an unprocessed composite.