To explore the deformation mechanisms of a new composite extrusion including extrusion and successive shear subsequently which is shorten "ES", Three dimensional finite element modeling of grain refinements for magnesium alloys by ES process has been researched. The ES die have been designed and manufactured and installed to the horizontal extruder. Finite element software DEFORM TM-3D to investigate the plastic deformation behaviors of magnesium alloy during extrusion-shear has been employed. The extrusion loads and temperatures distribution of billets and maximum extrusion forces have been obtained from simulation results. From the simulation results it is clear that evolutions of extrusion loads curve and effective stresses and temperatures can be divided into three stages. ES process has been applied to fabricate AZ31 magnesium alloy rod at preheat temperature of 420ºC with extrusion speed of 20 mm/s. The results proved that the ES process is a formality method for magnesium suitable for large scale industrial application. The microstructures of AZ31 magnesium alloy along the longitudinal section of rods have been sampled and examined and observed. Fine grained microstructures can be observed throughout longitudinal section of extruded rod. The researches results show that ES process would cause severe plastic deformation and improve the dynamic recrystallization of AZ31 magnesium alloy. The simulation results and calculated Zener-Hollomon parameters showed that the grains of magnesium would be refined gradually during ES process.