Two micro-alloyed Mg–Al–Ca alloys were designed, using thermodynamic calculations, to form precipitates during hot deformation. Hot compression tests were carried out at temperature range from 300 °C to 450 °C at strain rates of 0.1 s−1, 0.01 s−1 and 0.001 s−1. Precipitation behavior was analyzed by SEM with BSE and EDS detectors. Dynamic recrystallization and twinning were characterized by optical microscopy. It appears that dynamic precipitation retarded dynamic recrystallization.