A low carbon steel (Grade A) was subjected to friction stir processing (FSP), and the effect of FSP on the microstructure and mechanical properties was investigated systematically. It was found that two distinct zones called stir zone (SZ) and heat-effected zone (HAZ) were formed during FSP. The SZ and HAZ consist mainly of ferrite, widmanstatten ferrite, ferrite+cementite aggregates, and martensite. FSP considerably refined the microstructure of the steel by means of dynamic recrystallization mechanism and formed a volumetric defect-free basin-like processed region. The ferritic grain size of the steel decreased from 25 A mu m in the coarse-grained state to about 3 A mu m in the fine-grained state, and the grains formed were separated mostly by high angle of misorientation with low density of dislocations. This microstructural evolution brought about a considerable increase in both hardness and strength values without a considerable decrease in ductility. Ultrafine-grained microstructure formed around and just beneath the pin increased the hardness of the steel from 140 Hv0.3 to about 245 Hv0.3. However, no hardness uniformity was formed throughout the processed zone due to the changes in deformation- and temperature-induced microstructure. Both yield and tensile strength values of processed zone increased from 256 and 435 MPa to about 334 and 525 MPa, respectively.