To facilitate the wider application of wrought Mg alloys as structural materials, it is desirable to improve the formability and minimize the strength anisotropy inherent in these materials due to low symmetry of their hexagonal close-packed crystal structure. Grain refinement provides a potential approach to achieve these goals in Mg alloys. A study of grain refinement processing is presented in a companion paper [Yang Q, Ghosh AK. Acta Mater, in press]. The present paper deals with the formability of ultrafine-grain (UFG) Mg close to room temperature that has not been explored in the past. The present work examines such effects in UFG Mg prepared from hot-rolled plates by severe plastic deformation. Tension and compression tests in both in-plane and normal-to-plane directions are carried out on coarse- and fine-grain AZ31B Mg alloy at room temperature. It is found that the strain rate sensitivity of flow stress increases considerably due to grain refinement, and it enhances post-uniform elongation in a tension test. At the same time, yield strength is significantly enhanced and becomes more isotropic in the UFG alloy compared to the coarse-grain alloy. A rationale for enhanced strain rate sensitivity is presented, but this topic will be explored in greater detail in future papers.