In order to improve poor formability in magnesium alloy, grain refinement has been attempted on AZ91E alloy by a thermo-mechanical treatment. Specimens were firstly cold-rolled at 10 %, then solution heat treated at 673 K for 86.4 ks, and hot-rolled at 573 K with about 5 % for four passes, or hot-rolled at 20 % with one pass. The rolled specimens were finally heat treated at 473 to 673 K for 3.6 to 36 ks. Microstructures in the starting material characterized by grain boundary precipitates and aluminum rich regions with about 180 µm in grain size were changed into fine grained microstructures with about 10 to 30 µm in diameter, in which precipitates of Mg17Al12 were uniformly distributed. Although the specimen was prepared by rolling, the (0001) texture was not so remarkable.