The dynamic recrystallization (DRX) process of AZ31 magnesium alloy including microstructure and dislocation density evolution during hot compression was simulated by adopting the cellular automaton (CA) method coupling the Laasraoui-Jonas model (LJ model). The reliability of simulation depended on the accuracy of the hardening parameter, the recovery parameter and the strain rate sensitivity in the LJ model. The hardening parameter was calculated in terms of the LJ model and the Kocks-Mecking model (KM model), and then the recovery parameter and the strain rate sensitivity were obtained by using the equation of steady state flow stress for DRX. Good agreements between the simulations and the experimental observations were achieved.