Accumulative back extrusion (ABE) processing, as a novel severe plastic deformation (SPD) method, has been recently justified to be capable of modifying the microstructural characteristics of alloys. In line to its ongoing researches, the present work has been planned to study the evolution of γ-Mg17Al12 intermetallic phase during ABE and subsequent ageing treatment in a high Al-bearing Mg–Al–Zn alloy. The behaviour of γ intermetallic has been systematically examined as following points of view: (i) strain–temperature-dependent morphology changes, (ii) strain-induced dissolution, and (iii) re-ageing behaviour as a function of time and temperature. Aiming to analyse the morphology of eutectic γ compound with respect to the strain and temperature, 2D projections of effective diameter, shape factor and globularity have been made in strain/temperature graphs. The processing conditions (strain and temperature) corresponding to the desired and undesired morphologies are introduced and microstructurally explained through underlying plasticity mechanisms, i.e., ‘necking-thinning-particle separation’ and ‘brittle fragmentation.’ The former mechanism is suggested to be in relation with partial strain-induced dissolution of eutectic γ phase, leading to generation of a supersaturated solid solution. This has resulted to the observation of ‘off-stoichiometry’ phenomena in Mg17Al12 phase and has been justified through dislocation-assisted deformation mechanism at elevated temperature. Surprisingly, a unique re-ageing behaviour has been found for the obtained solid solutions, where a modified kinetics and morphology of γ phase precipitation were characterized. The altered precipitation behaviour is attributed to the specific defect structure achieved by SPD acting as fast diffusion channel for Al solutes.