Fusion based additive manufacturing (FBAM) of second, sixth, and seventh series Al alloys and their metal matrix composites (MMC) is difficult due to their higher thermal conductivity and solidification related problems namely porosity, cracks, thermal distortion, and formation of undesired phases. This paper presents friction stir powder additive manufacturing (FSPAM) process as a promising alternative to overcome these problems in producing multi-layer depositions of Al 6061 based MMCs namely Al 6061/6wt%FeCoNi and Al 6061/6wt%Ni. Their microstructure, distribution and elemental mapping of reinforcement particles, phase analysis, residual stresses of the MMCs and their correlation with microhardness, tensile strength, and fretting wear characteristics are investigated. Material accumulation on their advancing side was minimized by changing tool rotation direction in consecutive layers which produced smoother surfaces on both sides of their deposition. FSPAM made multi-layer depositions of Al 6061/FeCoNi and Al 6061/Ni MMCs have uniform distribution of reinforcement particles, good bonding between layers without cracks and defects, refined and equiaxed grains facilitated by dynamic recrystallization and pinning effect of reinforcement particles, compressive residual stresses of 39 and 48 MPa, no formation of deleterious intermetallic compounds due to absence of melting of matrix and reinforcement, and bowl-shaped substrate-deposition interface. Microhardness and ultimate tensile strength of the MMCs improved by 11.3% and 22.3%, and 30.5% and 31.5% respectively than Al 6061 alloy depositions, their wear resistance enhanced significantly, but % elongation reduced. This study proves FSPAM to be a potential alternative to FBAM processes for better quality multi-layer deposition of Al alloy-based MMCs.