Friction stir processing (FSP) is solid state novel technique developed to refine microstructure and to improve the mechanical properties and be used to fabricate the aluminium alloy matrix composites. An attempt is made to fabricate AA6061/TiB2 aluminium alloy composite (AMCs) and the influence of process parameters like rotational speed, transverse feed, axial load and percentage reinforcement on microstructure and mechanical properties were studied. The microstructural observations are carried out and revealed that the reinforcement particles (TiB2) were uniformly dispersed in the nugget zone. The Tensile strength and Hardness of composites were evaluated. It was observed that tensile strength, and hardness were increased with increased the rotational speed and percentage reinforcement of particles. The process parameters were optimized using Taguchi analysis (Single Variable) and Grey analysis (Multi Variable). The most influential parameter was rotational speed in single variable method and multi variable optimization method. The ANOVA also done to know the percentage contribution of each parameter