The integrity of dissimilar Al-Ti welds during conventional friction stir welding (CFSW) is compromised by excessive material mixing, leading to thick intermetallic layers. Underwater friction stir welding (UWFSW) mitigates these effects by inhibiting material mixing due to lower thermal conditions. Scanning electron microscopy revealed substantial Ti particles, appearing as blocks and strips, within the stir zone during CFSW. Static recrystallization, driven by exothermic reactions between Ti blocks and the Al matrix, resulted in over 93% recrystallized grains along stir zone, 10.7% higher than in UWFSW. In contrast, UWFSW resulted in a finer dispersion of Ti particles with reduced density due to lower frictional heat. The average grain size at the Ti interface of CFSW was 1.0 μm, compared to 2.6 μm in UWFSW. The inhomogeneous distribution of Ti particles in CFSW led to uneven dislocation distribution and increased stress concentrations, while finer Ti particles in UWFSW promoted a uniform grain structure, enhancing joint strength to 267 MPa, 13.4% higher than CFSW. Additionally, the γ-fibre and basal fibre texture in UWFSW increased joint ductility. The study highlights UWFSW’s effectiveness in joining dissimilar metals, offering significant advantages for industries such as aerospace and automotive.