The effect of isothermal multidirectional forging (IMF) on the microstructure evolution of a conventional Al–Mg-based alloy was studied in the strain range of 1.5 to 6.0, and in the temperature range of 200 to 500 °C. A mean grain size in the near-surface layer decreased with increasing cumulative strain after IMF at 400 °C and 500 °C; the grain structure was inhomogeneous, and consisted of coarse and fine recrystallized grains. There was no evidence of recrystallization when the micro-shear bands were observed after IMF at 200 and 300 °C. Thermomechanical treatment, including IMF followed by 50% cold rolling and annealing at 450 °C for 30 min, produced a homogeneous equiaxed grain structure with a mean grain size of 5 µm. As a result, the fine-grained sheets exhibited a yield strength and an elongation to failure 30% higher than that of the sheets processed with simple thermomechanical treatment. The IMF technique can be successfully used to produce fine-grained materials with improved mechanical properties.