Mg22Gd alloy was processed by high pressure torsion (HPT) at room temperature and the pressure of 2 GPa. A series of specimens with different number of rotations N (N = 0-15) was prepared from the initial coarse grained as cast material. Mechanical properties were investigated by microhardness mapping. The microhardness was found to increase with increasing strain imposed by HPT and tend to saturate at about HV = 145. The microstructure (phase morphology and composition, etc.) evolution with strain was investigated by scanning electron microscopy and EDS. High Gd content in the alloy resulted in the precipitation of stable Mg5Gd phase. This phase exhibited apparently higher hardness than the magnesium matrix. During straining the phase was continuously fragmented and only tiny particles were found in heavily strained material. Electron back scatter diffraction (EBSD) and automated crystallographic orientation mapping in transmission electron (ACOM-TEM) were employed to characterize the fragmentation of the grain structure. HPT was found to result in strong grain refinement by the factor of approximately 1000. The dislocation density was determined by positron annihilation spectroscopy. Significant twinning was found in the initial stages of HPT straining. At high strains twin formation was suppressed and only dislocation storage in the material occurs.