This study analyzed the effect of high-energy milling (HEM) and subsequent isothermal annealing on the microstructural characteristics of a prealloyed AZ91 Mg alloy powder. To this end, the mentioned powder was milled for 14 h using a horizontal attritor. Then, the mechanically milled powder was isothermally annealed at temperatures ranging from 200 1C to 500 1C for 1 h up to 4 h in an Ar atmosphere. HEM caused the b-Mg 17 Al 12 phase present in the microstructure of AZ91 powder particles to dissolve into their a-Mg solid solution matrix. In addition, the crystallite size of the a-Mg phase decreased to 25 nm through HEM. In contrast to the annealing time, the temperature of isothermal annealing had a significant effect on the microstructural features of the mechanically milled AZ91 powder.