A two-dimensional finite element model was used to analyze the deformation behavior of the magnesium powder in the multi-pass cyclic extrusion-upsetting (CEU) bulk mechanical alloying process, and the distributions of velocity field, effective stress field and equivalent strain field of the sample during CEU process were obtained. The simulation results indicate that powder particles flow vertically during extrusion and flow transversely during upsetting. The intense alternate shearing deformation was attributed to the inconformity of the flow rate and the flow direction during the cyclic extrusion-upsetting process; and the lord deformation region of the sample was located three according compressive stress state. Inhomogeneous deformations exist in the sample and the uniform region of equivalent strain increases with the increse of the CEU processing numbers. In addition, The experimental results of cyclic extrusion-upsetting process for three times showed that the banded structure was generated in the sample, and the intense shearing force broke the initial oxide and the inner hole of the sample, so the intense densification effect was formed during the CEU process. The relative density was measured to about 0.98 and the favourable metallurgical combination was obtained.