With growing demands for high-performance materials in marine, aerospace, and automotive applications, there is an urgent need to explore advanced solutions that combine sustainability with superior mechanical and functional properties. Conventional manufacturing techniques often fall short in meeting these requirements while maintaining environmental compatibility. Addressing this challenge, friction stir processing (FSP)—a green, solid-state technique—has been employed to fabricate Al2O3-reinforced Aluminium 5052 (AA5052) surface composites (SCs) with exceptional multi-functional enhancements. Microstructural characterization revealed that the uniform dispersion of nano-Al2O3 particles (∼50 nm APS) by FSP induced a remarkable ∼90% reduction in grain size, from ∼100 μm in the base metal (BM) to ∼8–10 μm in the stir zone, due to dynamic recrystallization and severe plastic deformation. Tribological assessments under dry sliding conditions demonstrated a 40% reduction in wear rate and a 20% lower coefficient of friction, attributed to the protective tribolayer formed by Al2O3 debris. Corrosion performance in 3.5% NaCl solution showed a 29% decrease in corrosion rate, with the composite exhibiting a nobler corrosion potential (−0.709V vs. −0.964 V for BM) and higher charge-transfer resistance. These findings highlight the potential of FSP-developed Al2O3/AA5052 SCs as sustainable, high-performance materials for demanding environments.