This paper proposes the large height-to-diameter ratio upsetting-extrusion (LHDR-UE) process. The process can realize single-pass severe plastic deformation, obtain more considerable strain in single-pass, obtain the better strengthening effect, and realize short process of billet making. However, the result of grain refinement and microstructure evolution has yet to be clarified. This study compared three samples with different height-to-diameter ratios (HDR of 4.5, 5.5, 6.5). The effect of the one-pass LHDR-UE on the microstructure evolution and dynamic recrystallization of Mg-Gd-Y-Zn-Zr alloys was investigated in detail. The results are displayed in the LHDR-UE process which can improve the alloy’s microstructure. The dynamic recrystallization rate of 4.5, 5.5, and 6.5 samples increased from 3.35, 10.41, and 18.37% after upsetting to 31.36, 38.39, and 54.98%, respectively. The average grain size decreased from 136.25, 83.94, 68.31 to 57.54, 43.88, 33.85 μm, respectively. In LHDR-UE process, grain refinement results from the combined effect of continuous dynamic recrystallization and discontinuous dynamic recrystallization. As the dynamic recrystallization ratio increases, randomly oriented recrystallized grains replace deformed grains with strong texture, decreasing the texture density.