Annular channel angular extrusion has been recently developed as a new single-pass severe plastic deformation method suitable for producing large size cup-shaped parts from cylindrical billets. In this study, the novel technology was successfully applied to commercial AZ80 Mg alloy at 300 °C, and microstructure, texture evolution, and mechanical properties were investigated. Due to severe shear deformation, the initial microstructure, including the coarse grains and large eutectic β-phases, was greatly refined. The strong basal texture formed during the initial deformation stage was modified into a weak tilted dynamic texture. During the deformation process, fine β-particles separated from eutectic phases effectively hindered the grain boundary migration and rotation, enhancing the grain refinement and texture weakening. More than 63% of the microhardness increase was achieved in this extruded part. Also, tensile tests showed the yield strength and elongation in both directions (transverse and longitudinal) of extruded part were improved more than 2.5 times, and the ultimate tensile strength was improved more than 2 times, compared to the initial material state. The improved material properties were mainly attributed to microstructure (grain and phase) refinement and texture weakening. It was demonstrated that the annular channel angular extrusion process can be considered as a novel and effective single-pass severe plastic deformation method.