The capability of a novel severe plastic deformation method for extrusion compression composite processing was investigated. Deform-3D software was used to study the effect of back pressure on the strain distribution of a workpiece by simulating the forming process with and without back pressure. The Mg-12.5Gd-4Y-2Zn-0.5Zr alloy was used to analyze the effect of strain on microstructure and mechanical properties. Results showed that back pressure led to the uniform strain distribution of the deformed workpiece and the decrease in the effective strain standard deviation from 0.73 to 0.68. With increasing strain, the grain size tended to decrease and then increase, contrary to the recrystallization rate trend. The tensile strength gradually increased with increasing strain, but the elongation change trend was changed due to the influence of the bimodal structure.