Controlling the formation of intermetallic compounds (IMCs) is a critical issue in friction stir welding (FSW) of Aluminum (Al) to magnesium (Mg) alloys. During FSW, Alsingle bondMg IMCs can form through two mechanisms comprising solid-state diffusion and liquefaction. Two kinds of IMCs can form during FSW of Al/Mg, Al3Mg2 (β) and Al12Mg17(γ). The IMCs produced via the former mechanism are identified as continuous whereas the IMCs produced by the latter typically appear as separate islands inside a matrix of eutectic structures. The present study aims to examine the impact of each morphology on the joint strength. For this purpose, dissimilar FSW of AA1050/AZ31 was carried out in lap configuration. The microstructure of the joints, as well as the fracture surfaces, were studied by scanning electron microscopy (SEM) and joint strength was evaluated by shear tensile testing. It was observed that the IMCs formed via diffusion were detrimental when their thickness exceeded 2 μm. It was also shown that liquefaction during FSW could control the thickness of the continuous IMCs layer. To elucidate this phenomenon, analytical and numerical methods were applied to calculate the growth kinetics of IMCs. It was concluded that the liquefaction phenomenon and the subsequent formation of eutectic structures reduced the activity of elements and thereupon hindered the diffusion rate in the solid state. In this case, although liquefaction raised the overall volume fraction of IMCs, the fracture load increased due to the propagated fracture through the eutectic microstructure rather than the continuous IMC layer.