Abstract: Mg–3Al–1Zn (AZ31) sheets were produced by transverse gradient extrusion (TGE) process. The flow behavior and dynamic recrystallization during extrusion were systematically analyzed. The microstructures, textures, and mechanical behavior of extruded AZ31 sheet were also analyzed and compared with conventional extruded (CE) sheet. The results showed that fine grain structure and multi-type unique textures were formed in TGE sheet because of the generation of extra flow velocity along transverse direction (TD) and flow velocity gradient along extrusion direction (ED) during extrusion. The basal poles gradually deviated away normal direction (ND) from edge to center of the TGE sheet along TD, and the largest inclination angle at center region reached around 65°. Furthermore, the basal poles inclined from ED to TD 40°–63°, except for the center region of TGE sheet. The TGE sheet presented higher ductility and strain hardening exponent (n-value), but lower yield strength and Lankford value (r-value) in comparison with the CE sheet. Both the basal <a> slip and tensile twins were easy to be activated during deformation, and the largest elongation of 41% and the lowest yield strength of 86.5 MPa were obtained for the ED-center sample in the TGE sheet.