Three different samples were prepared by tailoring the pre-ageing time to investigate the effect of different pre-aged states on the dynamic recrystallization behavior and properties of extruded Mg-9.5Gd-4Y-2.2Zn-0.5Zr (wt.%) alloy. The results showed that the volume fraction of fine grains was 17.4% for under-aged extruded (UAE) sample, while that of the peak-aged extruded (PAE) and over-aged extruded (OAE) samples reached 89.7% and 50.4%, respectively. Dense and fine β particles distributed inside grains and at grain boundaries significantly improved the nucleation sites and dislocation density through the particle-stimulated nucleation mechanism. However, the dense needle-like γ'''' phase inhibited dislocation slip and delayed dynamic recrystallization (DRX) nucleation. The difference in the fine grains between the PEA and OAE samples was attributed to a difference in the quantity and size of the original particles, and the difference in their tensile properties was caused by different microstructural components. The higher contributions of grain boundary strengthening and precipitation strengthening mechanisms gave PAE sample better tensile properties.