The microstructural evolution during compression (at 350°C and a strain rate of 0.01s-1) was examined for magnesium alloy AZ31 received in the "as-cast" condition. It was revealed that at low strains, many twins are produced and dynamically recrystallized (DRX) grains form as a necklace along pre-existing grain boundaries. At higher strains, DRX stagnates, most likely due to the accommodation of deformation in the DRX fraction of the material. It was also observed that twin boundaries act as sites for the nucleation of DRX grains. The analysis was repeated for samples pre-compressed to a strain of 0.15 at room temperature prior to the hot deformation step. The idea of these additional tests was to increase the degree of twinning and therefore the density of sites for the nucleation of DRX. It was found that statically recrystallized (SRX) grains developed at the twins during heating to the test temperature. When these samples were deformed, the peak flow stress was reduced by approximately 20% and the development of DRX was enhanced. This can be attributed to the accelerated nucleation of DRX in the refined SRX structure.