Sheet specimens of Mg alloy AZ31 were cross-rolled to different equivalent strains. The microstructure evolution was examined using a combination of OM, EBSD, TEM and XRD. The results revealed significant activity of basal and non-basal slip as well as twinning. The number of nano twin-bundles observed on EBSD patterns increased with increasing strain. Shear bands were also observed to form at high strains and eventually led to the failure of the sheet. As for the texture evolution, analysis of the pole figures shows an evident strengthening of the basal texture during the cross-rolling. Specimens of AZ31 cold-rolled to equivalent strains of 0.10 and 0.30 were selected and annealed at 250℃. The progress of recrystallization was followed using OM, EBSD and TEM with special emphasis on the nucleation of recrystallization. The distribution of recrystallization nuclei was very heterogeneous due to the heterogeneity of the as-deformed microstructure. Significant recovery was observed in the non-recrystallized regions and this limited the growth of the recrystallized grains.