Abstract Hot ring rolling (HRR) is widely used to fabricate large-size seamless ring-shape components. However, this process produces a severe mechanical anisotropy, which is not acceptable in practical industrial application and should be avoided. This paper reports the annealing-induced microstructural evolution and mechanical anisotropy improvement of HRRed Mg-8.12Gd-1.82Y-0.35Zr alloy ring. Results show that annealing treatment could improve the microstructural homogeneity of the ring owing to the occurrence of static recrystallization (SRX). SRX grains are preferentially formed at twin boundaries and initial grain boundaries due to high dislocation density, high level of stored energy, and stress concentration. Twin boundaries, to some extent, can suppress the migration of SRX grain boundaries. In addition, occurrence of SRX weakens the texture intensity and basal pole inclination, leading to a decrease in the mechanical anisotropy of the ring. Considering the weakened anisotropy, comparable strength, and improved ductility, annealing + aging (T6), compared with direct aging (T5), is a more suitable heat treatment schedule for the HRRed Mg-8.12Gd-1.82Y-0.35Zr alloy ring. Graphical Abstract Unlabelled Image Highlights • Growth of SRX grains in GBR is random, while that of TBR is anisotropic. • The new texture component in annealed MR weakens the anisotropy obviously. • T6 treatment leads to an excellent comprehensive mechanical property. [ABSTRACT FROM AUTHOR]