AZ31 Mg machined chips were recycled by extrusion at 673 K with a low extrusion ratio of 45:1 and a high extrusion ratio of 1600:1. Oxide contaminants were dispersed more uniformly in the recycled specimen with the high extrusion ratio than in that with the low extrusion ratio. In tensile tests, the recycled specimens with the high extrusion ratio showed about 50% higher 0.2% yield stress and about 20% higher tensile strength compared with those of the reference specimens, which were the extruded AZ31 Mg blocks under the same conditions as the recycled specimens. The improvement of the tensile properties was attributed not only to the small grain size, but also to the dispersed oxide contaminants.