Particle-stimulated nucleation (PSN) was investigated in magnesium alloy AZ31 to study the effect of the evolution of second-phases during extrusion and other metal forming processes. Compression tests were carried out on samples taken from coarse-grained as-cast magnesium alloy billets containing a lamellar Mg17All2 eutectic phase and (Al, Mn) particles. These revealed that particle-stimulated DRX nucleation (PSN) was taking place during hot deformation and that this is facilitated by the fragmentation of the Mg17All2. When Mg17All2 dissolves into the matrix at about 350°C, the (Al, Mn) particles remain effective in producing PSN at temperatures up to at least 400°C. This suggests that alloy design leading to a suitable distribution of second-phase particles can improve the properties and formability of wrought magnesium alloys.