<p>The growing demand for primary magnesium production poses significant environmental and resource challenges, particularly due to the limited availability of high-purity raw materials. Recycling AZ-series magnesium chips and machining waste has therefore become essential for sustainable materials management. Conventional remelting-based recycling methods are energy-intensive and often result in material loss, reduced purity, and compromised mechanical performance. Solid-state recycling via plastic deformation offers a promising alternative, producing ultrafine-grained AZ-series magnesium with enhanced mechanical and corrosion properties. This review critically examines current solid-state recycling approaches, including extrusion, equal-channel angular pressing, and high-pressure torsion, applied to the recycling of AZ-series magnesium chips. Key mechanisms governing bonding, grain refinement, and microstructural evolution are discussed, along with the influence of processing parameters such as temperature, applied strain, chip morphology, and compaction pressure. The role of corrosion behavior in determining the suitability of recycled AZ-series magnesium for engineering applications is also addressed. By consolidating current knowledge, this review provides a foundation for optimizing solid-state recycling techniques and guiding future research toward sustainable and high-performance recycling of AZ-series magnesium alloys.</p>