Magnesium and its alloys are potential candidate in the transportation sector being the lightest structural material. In this work, effects of calcium addition in a as-cast and homogenised AZ61 (aluminium 6 wt.% and zinc 1 wt.%) magnesium alloy was investigated. Phase prediction based on thermodynamic data indicated that formation of Al2Ca phase could effectively suppress the formation of Mg17Al12 phase. This Al2Ca phase was present in the microstructure in almost the actual stoichiometry, as found in SEM EDS. The formation of this phase was also confirmed by DSC. During hot compression, recrystallization took place irrespective of temperature. However, at elevated temperature, slight grain growth of the refined grains was evident. This was due to the thermal energy from the test temperature. Nevertheless, such grain growth was not very effective due to the presence of nano-size Al2Ca phase, which provided pinning effect by positioning at the grain boundaries.