The effect of aging status on adiabatic shear band (ASB) in Al-Zn-Mg-Cu alloy is systematically studied under dynamic shear loading. The microstructure within shear bands is characterized using EBSD method. It is found that peak-aged (PA) status shows the highest susceptibility to produce ASBs, followed by natural-aged (NA) status, while over-aged (OA) status exhibits the strongest resistance to shear localization. The localized bands in PA and NA states are characterized as transformed shear bands, composed of dynamically recrystallized (DRXed) ultrafine grains in the center, whereas the deformed shear band in OA status contains elongated subgrain laths and few ultrafine grains, which indeed confirms the previous finding, that DRX precedes the onset of ASB and may serve as the trigger for ASB. Based on the microstructural characteristics from the edge to the center of ASBs, it is demonstrated that progressive subgrain misorientation model can explain the DRX mechanism inside the ASBs, which involves a progressive evolution from lamellar structures to elongated laths, and eventually being transformed into ultrafine equiaxed grains. Precipitates play significant roles in DRX process by altering dislocation multiplication and subsequent evolution of substructures, thereby causing the different susceptibility of adiabatic shear localization.