In this study, a defect-free dissimilar joint of AZ61A/AZ40M Mg alloys was fabricated by friction stir welding (FSW). The microstructure of the joint was characterized by electron backscatter diffraction (EBSD), transmission electron microscopy (TEM), and X-ray diffraction (XRD). The corrosion resistance of the joint was evaluated by a mass-loss test and potentiodynamic polarization. Microstructural characterization revealed that the grains in the nugget zone (NZ) are fine and equiaxed due to dynamic recrystallization. The precipitation phases in the NZ are mainly Al8Mn5 and Mg17Al12 and form an incoherent interface with the matrix. The grain orientation in the joint undergoes a complex evolution after FSW. The grains in the NZ are mainly oriented along the < -12–10 > and < 01–10 > directions. The proportions of low-angle grain boundaries (LAGBs) in the thermo-mechanically affected zone on the advancing side (AS-TMAZ), NZ, and RS-TMAZ are approximately 44%, 61%, and 62%, respectively. The grain size in the NZ (8.72 μm) is larger than that in the AS-TMAZ and RS-TMAZ under a high welding heat input. However, the local misorientation for the AS-TMAZ, NZ, and RS-TMAZ is close and higher than that of the base metals. The local misorientation is mainly distributed in the fine grain band between large grains. The stir zone (SZ) exhibits a lower corrosion resistance than the base metals.