The formability and microstructure evolution rules of AZ31B magnesium alloy thin sheet in the incremental forming at elevated temperature were investigated on CNC machine by hot tensile test machine and metallographic microscopy. The results show that, at elevated temperatures, the AZ31B magnesium alloy thin sheet can be formed by single-point incremental forming, the forming limit angle increases with increasing temperature, reaches 60° at 200°C. Anisotropy has a great impact on the sheet metal incremental forming and it reaches the minimum value at 250°C. Incremental forming is a complex process including work-hardening, static recrystallization and dynamic recrystallization. The microstructures of the sheet are composed of coarse and fine grains, which depend on the sheet metal forming temperature and time. The quality of magnesium alloy sheet is one of the main factors that affect the quality of the incremental forming.