Cold-rolling was conducted on AZ31 magnesium alloy with fine and coarse grains to produce plates with high density of shear bands and \(\{10\bar{1}1\}\) twins, respectively. Then, these two kinds of plates are subjected to isothermal annealing to reveal the effect of shear bands and \(\{10\bar{1}1\}\) twins on recrystallization behavior. During annealing, static recrystallization occurs firstly in shear band zones and \(\{10\bar{1}1\}\) twin zones, which has different effect on texture and mechanical properties. With the increase of annealing temperature, strong basal texture remains in annealed SG-17% while the basal texture is weakened gradually in annealed LG-15%. Recrystallized grains from twin zones have a random orientation which is responsible for the weakened basal texture in annealed LG-15%. In addition, micro-hardness decreases gradually with the prolonged annealing time due to static recrystallization. LG-15% has a lower recrystallization activation energy because \(\{10\bar{1}1\}\) twins are benefit for the nucleation and growth of recrystallization grains. After 500 °C annealing, the yield strength decreases significantly with a significant improvement in failure strain. The annealed LG-15% has a much higher compressive strain than annealed SG-17% due to texture weakening effect.