A newly developed Mg–2Zn-0.3Ca-0.2Ce-0.1Mn (in weight %, ZXEM2000) wrought alloy exhibits an exceptionally high tensile ductility (29% ± 1.4% tensile elongation) along the rolling direction at room temperature. In this work, we investigated the fundamental plastic deformation mechanisms that can contribute to the high ductility of ZXEM2000. Scanning electron microscopy and transmission electron microscopy were carried out at selected strain levels to characterize the microstructural evolution. Compared with the deformed microstructures from the hot-rolled pure Mg and Mg–3Al–1Zn alloy at similar conditions, our results revealed that the high ductility of ZXEM2000 could be attributed to four key factors: weaker texture, fine grain size, reduced twinning, and increased cross-slip frequency of <c +a> dislocation. These direct observations offer a key insight into improving ductility of magnesium alloys for future alloy design and development.