A new RUE process was proposed to improve the microstructure and the mechanical properties of Mg alloys. The effects of deformation temperature on the microstructure and microhardness of RUEed AQ80 Mg alloy were studied. The results showed that the Mg alloy is subjected to sufficient corner shear deformation, upsetting deformation, and extrusion deformation, resulting in a large and uniformly distributed effective strain after RUE deformation. The microstructure is refined to an average grain size of 2.1 μm by the CDRX mechanism at 250 °C. As the temperature increases to 300°C, the DDRX mechanism is activated and the average grain size is refined to 1.6 µm by the combined effect of CDRX and DDRX. The orientations of the CDRXed grains have a clearly preferred orientation in relation to the parent grains, but those of the DDRXed grains are entirely different from their parent grains. At 350 °C, {10-12} extension twins appear in the microstructure, and the TDRX mechanism plays an important role in grain refinement. With the two strengthening mechanisms of fine-grained strengthening and dislocation strengthening, the microhardness of the 250 °C sample is greatly improved, with an increase of about 35.1% compared to the initial sample.