A hypoeutectic Mg‐1.0Si alloy was fabricated using a blend-press-sinter powder metallurgy route followed by high-ratio hot extrusion (19.1:1 at 300°C). Near-theoretical densities (< 0.6% porosity) were achieved, demonstrating effective deformation-assisted densification of Mg‐Si powder compacts. Phase analysis confirmed an α-Mg matrix containing finely dispersed \({\text{Mg}}_{{2}} {\text{Si}}\) particles formed by localized solid-state interfacial reactions. Limited Si solubility in Mg was inferred from minor lattice parameter contraction but was thermodynamically constrained. Extrusion-induced dynamic recrystallization resulted in significant grain refinement compared with powder-processed pure Mg. Semi-quantitative strengthening analysis indicates that the 26-MPa increase in tensile yield strength arises primarily from grain-boundary strengthening and Orowan dispersion strengthening, while solid-solution strengthening plays a minor role. Under tension, strength enhancement is accompanied by reduced ductility because of particle-assisted void nucleation under positive stress triaxiality. In contrast, compressive ductility is preserved and energy absorption increases, reflecting suppressed void growth and twinning-mediated deformation. The results demonstrate that controlled solid-state synthesis of fine \({\text{Mg}}_{{2}} {\text{Si}}\) combined with high-strain extrusion provides an effective pathway for strengthening hypoeutectic Mg‐1.0Si alloys while retaining compressive deformability.