This paper aimed to study and understand the mechanical phenomena of thermal elasto-plastic behavior on the dissimilar butt joint (Al 6061-T6 and STS304) by TIG assisted Friction Stir Welding. Heat conduction and residual stress analysis is carried out using in-house solver. Two-dimensional results of the heat distribution and residual stresses in dissimilar joint for particular tool geometry and material properties are presented. The predicted stress along longitudinal direction in Al 6061-T6 and STS304 are approximately between 12-15% of their respective yield strengths. A comparison is made between experimentally measured and numerically predicted equivalent residual stress values.