The variation of the grain and precipitate structure plays a rather important role on the response of the 7003-T6 Al-Zn-Mg-Cu alloys to high speed deformation but related reports are limited. This paper represents a detailed investigation about the flow behavior and microstructure evolution of these alloys under high strain rate impacting. Methods such as split Hopkinson pressure bar testing, optical and TEM microscopy, Vickers hardness testing, etc. were employed. Features such as plastic compression, tilting, distortion, elongation and refinement manners of the grains as deformation proceeds were studied. The changes of the precipitates in phase type, size and density, and their contribution to the flow stress during this thermo-mechanical process was investigated. The results show that the motion of dislocations and temperature rising induced by the impact work were responsible for these microstructure changes. Deformed shear bands with elongated grains formed in the diagonal direction of the sample when total strain reached 0.17. Prototype of the refined grain structure in these bands was constructed when the dislocation walls accumulate in the triangle grain boundary and form closed cells. With the assist of localized temperature rising and further increase of the strain to above 0.19, the deformed shear band was finally changed into transformed shear band with fine recrystallized grain structure in the center. Dynamic re-precipitation including phase transformation from GPII zones to ƞ′ and then to ƞ, coarsening in size and then dissolving was promoted. Elevated temperature and multiplied dislocation facilitated these processes. Precipitation coarsening in the matrix and dissolving in the ASB played a significant role of softening in the flow behavior as a counterbalance of the deformation and geometric hardening. A schematic model considering both of the grain structure and precipitate evolutions was established and discussed.