In this study, effects of initial orientation on microstructure evolution and mechanical properties of AZ31 Mg alloy sheets via accumulated extrusion bonding (AEB) was systematically studied. The samples with RD and TD parallel to extrusion direction (ED) were labeled as RED and TED, respectively. RD and TD pieces alternately stacked was named as RTED. The results revealed that under three-dimensional compressive stress, {10-12} tensile twinning dominated the first stage deformation in container. As the plunger continuous press down, dynamic recrystallization (DRX) occurred, and the newly fine DRXed grains along original and twin grain boundaries gradually consumed the matrix and twin grains. The microstructure was completely transformed into recrystallized grain structure at sizing band with an average grain size of ∼0.9 μm in TED sample, smaller than that of RED sample. After the alloys extruded out of the die, DRXed grains significantly grew to ∼4.5 μm and 3.5 μm for RED and TED samples, respectively. A laminated microstructure was obtained with average grain sizes of∼4.4 μm in RD layers and 3.5 μm in TD layers for RTED sample. The AEB processed samples exhibited an ED-tilt double-peak basal texture with similar texture intensity. The tensile tests results indicated that attributed to the combined effect of grain refinement and texture evolution, the yield strength and fracture elongation of RED and TED samples was significantly improved. The heterogeneous microstructure in RTED sample induced an extra work hardening (HDI-work hardening) in tensile deformation and resulted in a further improved elongation of 32.0%.