Friction stir welding (FSW) is a solid-phase bonding technique, which is suitable for bonding aluminium/magnesium dissimilar metals. In the present work, a nano-precipitated phase in 1060 Al/AZ31B Mg FSW joint was observed and analysed by transmission electron microscopy (TEM) and high-resolution electron microscopy (HRTEM). The type and morphology of the precipitated phase were determined. The results showed a nano-twinned precipitation phase, Al3Mg2, which was elliptical in shape and approximately 300 nm in size. In addition, the effective stacking fault energy (SFE) of nano-twinned Al3Mg2, approximately 3.51 mJ m−2, was calculated using the first principles and the effective SFE equation. A low effective SFE was beneficial to the crystal twinning of Al3Mg2. [ABSTRACT FROM AUTHOR]