Magnesium offers many advantages for lightweight design, but also presents challenges in terms of corrosion and flammability in the liquid state. This paper presents a process route for the production of a low-flammable magnesium matrix composite based on magnesium alloy AM60. The incorporation of calcium as an alloying element reduces the flammability but also reduces the ductility. Therefore, AlN nanoparticles are introduced into the casting by high-shear stirring followed by hot extrusion to improve the mechanical properties. The results show a grain refinement from the calcium and nanoparticles and the nanoparticles also increase both ductility and strength of the material. Some nanoparticle agglomerations were still present in the material, suggesting further upside in mechanical properties if more homogeneous particle distribution can be achieved.