The effect of extrusion temperature on the microstructure and mechanical behaviour of powder metallurgy AZ92 alloy has been investigated. After extrusion the microstructure consists of magnesium grains and γ(Mg17Al12) particles located at grain boundaries. The appearance of Al8Mn5 particles in the original powders is also observed. As the extrusion temperature decreases, the yield stress increases due to grain size refinement and a higher volume fraction of γ(Mg17Al12) particles.