This study employs a finite element thermo-mechanical model, using a Lagrangian incremental setting to investigate friction extrusion (FE) under varying process conditions. The incorporation of rotation in FE generates substantial frictional heat, leading to significantly reduced process forces in comparison to conventional extrusion (CE). The model reveals the interplay between temperature, strain, and strain rate across different microstructural zones of the resulting wire. Specifically, the sticking friction condition in FE enhances initial shear deformation, aligning with a homogeneous spatial strain distribution and predicting complete grain refinement in the extruded wire, as per Zener-Hollomon calculations. On the other hand, under the sliding friction condition in FE, the shear deformation is reduced which results in an inhomogeneous microstructure in the extruded wire. The analysis of material flow in the workpiece reveals distinct transitions from the base material to the thermo-mechanically affected zones. The simulated process force, thermal history, and microstructure during sliding friction conditions align well with the findings from performed friction extrusion experiments.