FeCrAl alloys have the opportunity to replace current Zr-based cladding materials in light water reactors, and dynamic recrystallization (DRX) plays an important role on microstructural controlling of FeCrAl alloys during hot or warm deformation, such as forging, hot rolling, extrusion. In this research, dynamic recrystallization mechanism of FeCrAl alloy has been systematically investigated by microstructure characterization after isothermal compression. Results show that deformation strain rate and temperature could significantly influence microstructure and DRX mechanism of FeCrAl alloy. When deformed at 0.1s−1, prior grains become long strip with serrated boundaries and are refined by geometric dynamic recrystallization (GDRX). Prior grains are not separated by high angle grain boundaries (HAGB) even deformed at 1200 °C, because strain is too small to impingement of HAGB. Whereas, when deformed at 10s−1 strain rate, there are lots of sub-boundaries with about 2° misorientation within grains, and several strain-free grains are found located at boundaries when deformed at 900 °C or 1000 °C, while the prior grains are divided by HAGB and equiaxed grains are formed at 1100 °C. It was found that mechanism of DRX changes from discontinuous dynamic recrystallization (DDRX) to continuous dynamic recrystallization (CDRX) with increasing temperature from 900 °C to 1100 °C. The phenomenon results from the dislocation movement behaviors changes with increasing temperature. This research will provide meaningful guidance for industrial application of FeCrAl alloys.