Selective laser melting (SLM) technique is a viable alternative to fabricating metal matrix composites (MMCs) with controllable structures; however, its implementation remains challenging because of the unpredicted defects arising from the reinforcement. This study primarily examined the microstructural evolution and grain growth in the Ag–Cu/diamond composites at the molten pool scale during the SLM process via a thermodynamic analysis. The feasibility of manufacturing Ag–Cu/diamond composites was verified using several processing parameters. Moreover, the influence of energy density on the microstructures and grain growth was also demonstrated theoretically and experimentally. The formation of different kinds of grain morphologies in the molten pool was ascribed to the temperature gradient and cooling rate, corresponding to the direction and size of grain growth. The generation of Ag–Cu nanowires at the grain boundaries was firstly found in the SLM technique, which was related to the pressure stress generated by the high cooling rate of SLM. This work hopefully opens new paths for the applications of high-performance Ag–Cu/diamond MMCs in various application fields. It also provides new possibilities for the controllable manufacturing of Ag nanowires during SLM.