In the present study the effect of initial texture and annealing temperature on the microstructure and mechanical anisotropy of pure magnesium has been investigated. Evolution of microstructure after annealing was analysed by optical microscopy and SEM/EBSD. Magnesium samples with different initial textures were deformed at room temperature at a strain rate equal to 10−3 s−1 followed by subsequent annealing at 473 K and 673 K. The texture evolution, work hardening and microstructure have been examined after annealing treatment. It was found that the initial texture affects the main deformation mode as well as influences the texture upon annealing. During compression, samples deform by twinning, while slip becomes the dominant deformation mode for samples having c-axis perpendicular to the extrusion direction. Moreover, it was shown that the recrystallization temperature is critical for texture evolution and mechanical properties of the annealed magnesium samples. Annealing at 473 K does not initiate recrystallization in samples exhibiting twins whereas samples without twins undergo recrystallization strengthening particular texture components in ODF sections. However, annealing at 673 K leads to a strong grain growth lowering the yield strength of the material. It was shown that an intensive twinning can stabilize the microstructure of pure magnesium and improves its mechanical properties up to 473 K.