This study investigates the feasibility of producing AM60 magnesium alloy composite rods reinforced with silicon carbide (SiC) microparticles via friction stir extrusion (FSE). Recycled AM60 chips were mixed with 0.5, 0.75, and 3 wt.% SiC microparticles and cold-pressed into billets. The extrusion process was conducted at a rotational speed of 1600 rpm and a feed rate of 8 mm/min. The results showed that the sample containing 0.75 wt.% SiC exhibited the highest ultimate tensile strength of 163 MPa, representing a 14% increase compared to the pure sample (143 MPa). The hardness of this sample reached 83 HV, a 48% increase over the pure sample (56 HV). The sample containing 3 wt.% SiC exhibited reduced strength and hardness, which may be associated with the formation of particle-rich regions and an increased tendency for particle clustering. Qualitative examination of the SEM images indicated a relatively homogeneous particle distribution in the examined fields of the 0.5 and 0.75 wt.% SiC samples, whereas regions with higher particle concentration were observed in the 3 wt.% SiC sample. Furthermore, it was found that an H13 steel punch with a suitable forehead angle performed better than HSS steel. The optimum composite was AM60 containing 0.75 wt.% SiC. Fractography revealed that pure AM60 exhibits brittle fracture, while adding SiC particles up to 0.75% changes the local fracture surface characteristics with deeper voids.