The physical field and dynamic recrystallization (DRX) evolution of magnesium (Mg) alloy thin-walled wheels during backward extrusion (BE) were investigated by coupling the cellular automaton (CA) model with the finite element (FE) model in this study, and the simulation results were verified by industrial experiments. Findings revealed that the wheel bottom is always in a three-way compressive stress state when the lower rim is filled, while the rim is under two-way compressive stress and one-way tensile stress in the filling process. Sufficient effective strain is accumulated at the rim compared to the wheel bottom, and different from the uniform and small grain size distribution at the rim, there was insufficient DRX at the wheel bottom, as well as local grain growth due to deformation heat. The wheel bottom is dominated by the mixed grain structure, mainly consisting of necklace-like DRXed grains and initial coarse grains, and the microstructure at the rim shows equiaxed grains except for the upper rim, where are still incomplete recrystallization grains. With the increase of extrusion temperature (360–420℃), the DRX volume fraction and the average grain size of the wheel increased, but the effect on the grain size at the rim was not significant due to severe plastic deformation (SPD) above the critical strain.