This study compared the mechanical and microstructural properties produced during friction stir welding of S275 structural steel in air and underwater. Post-weld tests assessed the tensile strength, microhardness, distortion, Charpy impact toughness and fatigue performance in each case. The study showed that there was no significant difference in the strength, hardness or fatigue life of the air and underwater specimens. However, Charpy impact toughness was shown to decrease for the underwater specimens and was attributed to the presence of a slightly less angular grain structure than the samples welded in air. Reduced angular and longitudinal distortion was observed in the underwater welded plate compared to the plate welded in air.