Commercial MgAlZn alloy AZ31 was processed by two techniques of severe plastic deformation, namely equal channel angular pressing (ECAP) and high pressure torsion (HPT). Microstructure evolution with strain due to ECAP and HPT was investigated by light and transmission electron microscopy (TEM). Significant grain refinement was observed in specimens processed both by ECAP and HPT. Moreover, HPT resulted in radial strain and microstructure inhomogeneity across the diameter of the sample disk. This inhomogeneity was continuously smeared out and almost homogeneous ultra-fine grained structure was observed in specimen subjected to 15 HPT rotations. Dislocation structure changes in individual specimens after different number of ECAP passes and HPT rotations were investigated by positron annihilation spectroscopy (PAS). Sharp increase of dislocation density occurred during the first two passes of ECAP, followed by the saturation and even a decline manifesting the dynamic recovery at higher strains.