Deformation mechanisms of Mg-Al-Zn (AZ31) alloys were investigated by performing tensile test at room temperature. In fine grain Mg alloys deformed at room temperature, nonbasal slip systems were found to be active as well as basal slip systems because of grain-boundary compatibility effect. Slip-induced grain-boundary sliding occurred as a complementary deformation mechanism to give rise to c-axis component of strain. With increasing grain size, the activation of the nonbasal slip systems was limited near grain boundaries. Instead of grain-boundary sliding, twinning occurred as a complementary deformation mechanism in large grained samples. Orientation analysis of twins indicated that twinning is induced by stress concentration due to the pile up of basal dislocations. The grain-size dependence on deformation mechanism was found to affect yielding behavior both microscopically and macroscopically which can influence various mechanical properties such as fatigue and creep.