The microstructure and mechanical properties improve substantially by hot working. This aspect in as-cast Mg-7.7Al-0.4Zn (AZ80) alloy is investigated by compression tests over temperature range of 30-439°C and at strain rates of 5 × 10−2, 10−2, 5 × 10−4 and 10−4 s−1. The stress exponent (n) and activation energy (Q) were evaluated and analyzed for high-temperature deformation along with the microstructures. Upon deformation to a true strain of 0.80, which corresponds to the pseudo-steady-state condition, n and Q were found to be 5 and 151 kJ/mol, respectively. This suggests the dislocation climb-controlled mechanism for deformation. Prior to attaining the pseudo-steady-state condition, the stress-strain curves of AZ80 Mg alloy exhibit flow hardening followed by flow softening depending on the test temperature and strain rate. The microstructures obtained upon deformation revealed dissolution of Mg17Al12 particles with concurrent grain growth of α-matrix. The parameters like strain rate sensitivity and activation energy were analyzed for describing the microstructure evolution also as a function of strain rate and temperature. This exhibited similar trend as seen for deformation per se. Thus, the mechanisms for deformation and microstructure evolution are suggested to be interdependent. © 2016, ASM International.