A Ti-AZ31 composite was severely plastically deformed by rotary swaging at room temperature up to a logarithmic deformation strain of 2.98. A value far beyond the forming limit of pure AZ31 when being equivalently deformed. It is observed, that the microstructure evolution in Mg-AZ31 is strongly influenced by twinning. At low strains the {1011} 1012 and the {1012} 1011 twin systems lead to fragmentation of the initial grains. Inside the primary twins, grain refinement takes place by dynamic recrystallization, dynamic recovery and twinning. These mechanisms lead to a final grain size of ≈ 1 µm, while a strong centered ring fibre texture is evolved.