Friction stir processing is an important method for acquiring ultrafine-grained materials. In this paper, 3 mm ZK60 magnesium alloy sheet was carried for friction stir processing. The best processing parameters with a small grain size and maximum mechanical properties were obtained by comparing different rotation speeds and processing speeds. Fine recrystallized grains and high-angle grain boundaries were observed in stirring zone under different processing parameters. With increasing rotation speed, the grain size and high-angle grain boundary ratio increase; while with increasing processing speed, the grain size decrease, and the ratio of high-angle grain boundaries increase. When rotation speed and processing speed are 1400 r·min −1 and 100 mm·min −1, the processing plate have the largest ultimate tensile strength are 267.52 Mpa, that reached 84.62% of the base metals, and the yield strength, elongation and grain size are 166.97 Mpa, 15.32% and 1.12 ± 1.64 μm, respectively. The processing plate has more excellent damping performance than rolled.