Addition of SiC reinforcement in a Mg2Si matrix results in the localization of the secondary phase along the edges of the melt pools of the primary phase; in parallel, modification of the microstructure is carried out to form laser-irradiation-induced Mg3N2 and Si3N4 compounds (ternary and quaternary nitride reinforcement phases) by controlling the concentration of Ar and N2 during additive manufacturing. This strategy enables the development of a compositional gradient from the centers to the edges of the melt pools of the Mg2Si–SiC/nitride hybrid composite. Consequently, the coefficient of friction of the hybrid composite decreased to –1.67, while that of the nonreinforced (conventional) Mg2Si structure was –0.54. This outstanding mechanical behavior is due to the (1) complementary and synergistic reinforcement effects of the SiC and nitride compounds, each of which possesses an intrinsically high hardness level, and (2) strong adhesion of these compounds to the Mg2Si matrix despite their small sizes and low concentrations. To illustrate the feasibility of laser powder bed fusion of this new type of Mg2Si–SiC/nitride hybrid composite with a functionally graded structure for ultimate wear resistance, topological optimization was applied to the pinion and rack, which are core parts of the steering gear system (i.e., in the automotive industry) after identifying the stress-bearing regions and removing any unnecessary stress-free regions.