In this work, the Mg-3Sn-2Al-1Zn (TAZ321, wt. %) alloy with excellent high temperature resistance was compressed using a Gleeble-3500 thermo-mechanical simulator at a wide temperature and the strain rate range. The kinetics analyses showed that the dominant deformation mechanism was likely caused by the cross slipping of dislocations. A constitutive equation which expressed the relationship between the flow stress, deformation temperature, and strain rate was established, and the average activation energy Q was calculated to be 172.1 kJ/mol. In order to delineate the stability and instability working domains, as well as obtain the optimum hot working parameters of the alloy, the hot processing maps in accordance with Prassad’s criterion are constructed at the true strain of 0.2, 0.4, 0.6, and 0.8, respectively. Based on the hot processing map and microstructure observation, the optimum hot working parameter was determined to be 350 °C/1 s−1. The continuous fine dynamic recrystallization (CDRX) grains occurred in the optimum deformation zone. The predicted instability domains was identified as T = 200–300 °C, ε ˙ = 10−2–1 s−1, which corresponded to the microstructure of deformation twinning and micro cracks at the intersection of grain boundaries.