AZ31 Mg alloy was rolled at the temperature ranging from 603 K to 703 K with reduction from 20% to 40% and strain rate from 4 s-1 to 16 s-1. The effect of reduction per pass, strain rate and rolling temperature on the microstructure of the deformed Mg alloy was studied. The dynamic recrystallization (DRX) mechanism of AZ31 Mg alloy during hot rolling was investigated. The results demonstrate that the strain rate and the temperature not only affect the extent of DRX, but also change the mode of DRX or nucleation mechanism. When the strain rate is = 13.9 s-1, the DRX mode is twinning-induced DRX at T=603 K; but there appear some new chain-like grains along the original grain boundaries at T=703 K. When the temperature is T= 673 K, DRX is mainly twinning-induced DRX at the strain rate = 11.35 s-1, while with the strain rate decreasing to = 4 s-1, the DRX mode turns into rotation DRX.