The deformation behavior of the as-extruded Mg-Li-Al-Zn-Si alloy was studied by conducting a hot compression test, with a temperature range of 180–330 °C and a strain rate range of 0.01–10 s−1. The constitutive relationship of flow stress, temperature, and strain rate was expressed by the Zener–Hollomon parameter and included the Arrhenius term. By considering the effect of strain on the material constants, the flow stress at 240–330 °C could be precisely predicted with the constitutive equation (incorporating the influence of strain). A processing map was established at the strain of 0.7. The unsafe domains that are characterized by uneven microstructures were detected at low temperatures (<230 °C) or high temperatures (>280 °C), with high strain rates (>1 s−1). The optimum hot deformation region was obtained at a medium temperature (270–300 °C), with a peak power dissipation efficiency of 0.44. The microstructural evolution in different domains is investigated. The unstable domains are characterized by a non-uniform flow behavior and uneven microstructure. The observation showed that the dynamic recrystallization (DRX) process could easily occur at the safe domain with high power dissipation efficiency. For the α-phase, some features of continuous dynamic recrystallization can be found. The triple points serve as prominent nucleation sites for the β-phase DRX grains and the growth in the grains was carried out by subgrain boundary migration. The microstructure exhibits characteristics of discontinuous dynamic recrystallization.