In order to investigate the effect of the as-cast microstructure on the hot working behavior of an AZ31 magnesium alloy, specimens were cast in copper moulds with and without water cooling. A series of compression tests were performed at a temperature of 350 °C, a strain rate of 0.01 s-1, and at strains up to 1.0. It was found that as-cast microstructure is very sensitive to the solidification conditions, which leads to a significant difference in flow behavior and dynamic recrystallization (DRX) characteristics. It appears that more uniform and refined as-cast grain size promotes dynamic recrystallization and reduces the flow stress. It is also possible that second phases (>1+m in size) contribute to DRX by acting as nuclei.