Engineering stability control of microstructure evolution and precision forming is a key technical issue for the high-performance manufacturing of magnesium alloy components. In this paper, a fine-grain processing window was proposed for the workability optimization and microstructure control of AZ80 magnesium alloy. The hot activation energy map (AEM) and processing map (PM) were established to analyze the hot-working properties and microstructural mechanisms, respectively. The internal state variable (ISV) based finite element (FE) model was introduced to predict the evolutions of grain size and microstructure homogeneity with processing parameters during multi-angular extrusion process. The fine-grain processing window was used to form a magnesium alloy plate. Fine microstructure and good forming performance were obtained with the optimized processing parameters at the complete DRX domain. Forming at the processing instability domain exhibited flow defects and microstructure heterogeneity. The above research can be applied to the processing parameter optimization and microstructure regulation during hot forming processes of magnesium alloy.