AZ31 alloy powder was prepared by gas-atomization and consolidated into a round bar by hot extrusion at temperatures of 573K and 623K with extrusion ratios of 1:10 and 1:20. The extruded AZ31 alloy powders consist of fine grain with an average grain size of 10 mum and show a high tensile strength of 340MPa with an elongation of about 18% at room temperature. The compression test at elevated temperatures reveals that the sample extruded with extrusion ratio of 1:20 was easily deformed to a forming degree of 0.6 without fracture at temperatures above 423K and have a good formability. On the contrast, the extruded sample with an extrusion ratio of I: 10 shows cracks after deformation. The extrusion ratio plays an important role on the formability. It is said that the powder metallurgical processing is useful to produce a high strength Mg alloys with a good formability at temperatures above 423K.