This study investigated the effects of two-stage in-plane compression on the microstructural evolution and drawability of rolled AZ31B magnesium alloy sheets. To overcome the difficulty of applying more than 8% compressive strain in a single step, two-stage compression was employed, in which the sum of the first (ε_c1) and second ( ε_c2) compressive strains defines the total strain (ε_{c, total}). The results of the outermost compression test revealed that when ε_c1 reached 8%, (0001) basal texture changed from ND to RD orientation, promoting thickness-direction deformation and improving drawability. However, excessive total strain (ε_c, total>8%) led to severe work hardening and localized deformation, reducing formability. Moreover, strain ratio (λ ＝ ε_c2/ε_c1) and ε_c2 significantly influenced drawability. When λ ≥ 1.5 (e.g., 3-6% and 4-6%), poor formability was observed owing to excessive ε_c2, causing localized stress concentration. In contrast, the 8-3% specimen (λ ＝0.38) exhibited the highest drawability. These findings indicate that reducing λ contributes to improved formability. However, simply decreasing λ is insufficient, and controlling ε_c2 within 4% is essential. Proper ε_c2 adjustment facilitates crystal orientation dispersion, promotes thickness-direction deformation, and suppresses localized stress concentration, thereby enhancing drawability.