Magnesium alloy slurry was prepared using Strain-Induced Melt Activation(SIMA) technique. The samples were quenched into water so as to fix the high temperature instantaneous microstructures. The microstructure evolution of compressed deformation Mg alloy is studied in the process of continuous heating and iso-temperature of semi-solid state. The results indicate that deformed Mg alloy (AZ91) has first occurred to have the conversion of dendrite crystal-oriented isometric crystals in the continuous heating process. When the temperature rises to the range of semisolid state, the region with high energy at the pressed stripes begins to melt, showing that the cellular structures emerge in the crystal boundary and melting micro-pool phenomena appear within the crystals. With the iso-temperature time in semisolid state prolongs, the isometric crystals can be gradually converted into spherical crystal grains.