Repetitive upsetting and extrusion (RUE) was firstly carried out on 2A66 Al-Li alloy. Electron back-scatter diffraction (EBSD), transmission electron microscopy (TEM), scan electron microscopy (SEM), and room temperature tensile testing were then performed to investigate the microstructure characteristics and mechanical properties of 2A66 Al-Li alloy. The results showed that RUE was effective in refining the microstructure of 2A66 Al-Li alloy. With the increase of RUE pass numbers, high density dislocations in 2A66 Al-Li alloy gradually transformed to dislocation walls and subgrain boundaries, distribution of large second phase (θ′) became more homogenous, and a part of β′ dispersion dissolved into the aluminum-lithium alloy matrix. After RUE processing, the ductility improved greatly with a modest reduction in strengthening, as the toughening of the alloy was mainly attributed to the change of dislocation, the homogeneity and fragment of θ′ phase, and the dissolution of β′ dispersion.