In this study, Mg/Al bimetallic composite tubes (BCTs) were successfully fabricated using the hot power spinning (HPS) process, and the width of the interface diffusion zone was effectively controlled by adjusting the annealing time and temperature. The shear fracture mechanism and microstructure evolution of the Mg/Al BCTs were investigated using various microscopic characterization techniques and mechanical tests. The results showed that as the diffusion zone length increased from 6.27 µm to 18 µm, the shear strength improved from 14.21 MPa to 26.89 MPa. However, when the diffusion band was further expanded, a brittle intermetallic compound (IMC) layer, composed of Mg₁₇Al₁₂ and Al₃Mg₂, formed, which reduced the interfacial bonding strength. When the annealing temperature was raised to 400 ℃, a Kirkendall void layer developed at the interface, decreasing the shear strength to 4.32 MPa. On the Al side, static recrystallization significantly reduced the grain size, and a more pronounced Goss texture appeared. On the Mg side, a large number of abnormally grown grains were continuously broken down into finer grains under the influence of annealing twins, and the c-axis of the grains showed significant alignment in the rolling direction (RD). When the diffusion layer formed Mg₁₇Al₁₂ and Al₃Mg₂, the interface exhibited a distinct equiaxed crystal morphology, and the grains grew radially along with the expansion of the IMCs. These findings enhance the understanding of the manufacturing process of Mg/Al BCTs and provide valuable insights for regulating the interface structure and bonding strength of Mg/Al BCTs.