An AM60 magnesium alloy reinforced with 1 wt. % AlN nanoparticles was prepared by mechanical melt stirring and ultra-sonication for deagglomeration of nanoparticles. The produced nanocomposites were indirectly extruded into round bars under varied extrusion ram speeds. The same process was also performed to the unreinforced AM60 alloy to determine the impact of the AlN nanoparticles on the microstructure evolution and mechanical properties in both materials. Furthermore, the influence of the extrusion rates on the recrystallization behavior and the particle related strengthening is analyzed with respect to its influence on strength. One result of this study is the decreasing yield strength of the investigated materials with increasing extrusion speed.