This research demonstrates the use of submerged friction stir welding under liquid nitrogen as an alternative and improved method for creating fine-grained welds, and hence, to alleviate formation of intermetallic phases. Magnesium alloy and aluminum alloy were joined by friction stir welding in two environments, namely air and liquid nitrogen, with 400 rpm rotation and 50 mm/min travel speed. The temperature profile, microstructure, scanning electron microscope energy dispersive X-ray spectroscopy analysis and hardness were evaluated. In the stir zone of air-welded specimen, formation of brittle intermetallic compounds causes the weld to crack. These phases were formed because of constitutional liquation. The stir zone of under liquid nitrogen-welded specimen showed that formation of intermetallic compounds is suppressed significantly because of lower heat input.