In order to obtain Mg alloys with fine microstructures and high mechanical performances, a novel friction-based processing method, name as “constrained friction processing (CFP)”, was investigated. Via CFP, defect-free Mg-Zn-Ca rods with greatly refined grains and high mechanical properties were produced. Compared to the previous as-cast microstructure, the grain size was reduced from more than 1 mm to around 4 µm within 3 s by a single process cycle. The compressive yield strength was increased by 350% while the ultimate compressive strength by 53%. According to the established material flow behaviors by “tracer material”, the plastic material was transported by shear deformation. From the base material to the rod, the material experienced three stages, i.e. deformation by the tool, upward flow with additional tilt, followed by upward transportation. The microstructural evolution was revealed by “stop-action” technique. The microstructural development at regions adjacent to the rod is mainly controlled by twinning, dynamic recrystallization (DRX) as well as particle stimulated nucleation, while that within the rod is related to DRX combined with grain growth.