A newly developed magnesium alloy Mgx2013;5Gdx2013;4Yx2013;0.5Znx2013;0.5Zr (GWZ540) was hot extruded and then compressed at temperatures between 573 and 673 K and strain rates ranging from 2 d7; 10−4 to 2 d7; 10−1 s−1. The stressx2013;strain behaviors and volume fraction of dynamic recrystallized (DRX) grains were determined. It is shown that the form of the flow stress curves is sensitive to temperature and strain rate and DRX mechanisms of the alloy varied as deformation progresses. High density dislocation was formed at boundaries of coarse grains and around some particles of second phase at first. Dislocation cell walls then were formed and converted into subgrain boundaries. New recrystallized grains were formed finally at the base of subgrain boundaries and particles of second phase.