The effects of the working temperatures (260 °C, 200 °C and 130 °C) on microstructure formation in the AA 6063 alloy, processed upto ten passes by cyclic expansion extrusion (CEE) was studied. The microstructures of the CEE-processed specimens in the convergent and extrusion regions (center and edge) were examined after every two passes. The EBSD analysis revealed a decrease in the average grain size from 22 ± 5 µm to 2 ± 0.5 µm after four passes, with a simultaneous presence of a large fraction of HAGBs (45%) at 130 °C processing temperature. The TEM observations also confirmed the presence of nano-grains of sizes in the range of 50–100 nm. The CEE-processed specimen showed the highest improvement in hardness and ultimate tensile strength from 38 ± 3.4 HV and 118 ± 6 MPa to 122 ± 1 HV and 267 ± 2 MPa, respectively, after four passes at 130 °C. The specimens processed at 260 °C (ten passes), and 200 °C (four passes) showed moderate improvement in strength of 184 ± 3 MPa and 216 ± 3 MPa, respectively. On further straining (at 200 °C and 130 °C after six to ten passes), continuous dynamic recovery and dynamic re-crystallization took place which led to grain growth during SPD and, as a result, the alloy lost its strain hardening capacity and there was a decrease in the mechanical properties. At higher number of passes, the grains were elongated and coarsened, i.e., a non-equiaxed microstructure was seen after ten passes at 200 °C and 130 °C. In contrast, the specimen processed at 260 °C after ten passes, showed a homogeneous microstructure with near-equiaxed grains with 38% of HAGBs. A lower processing temperature produced a microstructure with a fine grain size distribution after a lower number of passes.