Microstructural evolutions of AZ91 magnesium alloy, which applied to homogenizing annealing treatment, hot extrusion and ageing treatment respectively, are investigated in this paper. Results exhibit that the massive β-Mg17Al12 phase appearing in the initial structure dissolves to eliminate in α-Mg matrix mostly due to the homogenizing annealing treatment; dynamic recrystallization and consequent grain refinement occur during extrusion; banded structure, in which the β-Mg17Al12 phase precipitates parallel to the extrusion direction in α-Mg matrix, are observed in the ageing treated specimen. Furthermore, the effects of temperature, keeping time of homogenizing annealing treatment and ageing treatment, and the extrusion processing parameter on the microstructural evolution of this alloy are also discussed according to the experimental results in details. In addition, the various mechanisms of the morphology and quantity of α-Mg and β-Mg17Al12 phase are analyzed corresponded to the various states. As for the banded structure appearing in the ageing treated specimen, it can be attributed to the banded segregation which remained in the extruded one and resulted from the casting dendrite and subsequent extrusion.