Constructing the magnesium alloy with fine grains, low density of dislocations, and weak crystal orientation is of crucial importance to enhance its comprehensive performance as the anode for Mg-air battery. However, this unique microstructure can hardly be achieved with conventional plastic deformation such as rolling or extrusion. Herein, we tailor the microstructure of Mg-Al-Sn-RE alloy by using the friction stir processing, which obviously refines the grains without increasing dislocation density or strengthening crystal orientation. The Mg-air battery with the processed Mg-Al-Sn-RE alloy as the anode exhibits higher discharge voltages and capacities than that employing the untreated anode. Furthermore, the impact of friction stir processing on the electrochemical discharge behaviour of Mg-Al-Sn-RE anode and the corresponding mechanism are also analysed according to microstructure characterization and electrochemical response.