Ultrafine-grained (UFG) Al-Mg-Sc alloy was obtained by friction stir processing. The UFG alloy was subjected to uniaxial tensile testing to study the tensile deformation behavior of the alloy. An inhomogeneous yielding (Ludering phenomenon) was observed in the stress-strain curves of UFG alloy. This deformation behavior was absent in the coarse-grained alloy. The Ludering phenomenon in UFG alloy was attributed to the lack of dislocations in UFG microstructure. A strong dependence of uniform ductility on the average grain size was exhibited by the UFG alloy. Below a critical grain size (0.5 mu m), ductility was very limited. Also, with the decrease in grain size, most of the plastic deformation was observed to be localized in necked region of the tensile samples. The negative strain rate sensitivity (SRS) observed for the UFG alloy was opposite of the SRS values reported for UFG alloys in the literature. Based on activation volume measurement, grain boundary mediated dislocation-based plasticity was concluded to be the micro-mechanism operative during plastic deformation of UFG Al-Mg-Sc alloy.