Magnesium and its alloys are attractive as light weight structural/functional materials for high performance application in automobile and electronics industries due to their superior physical properties. In order to obtain high quality products manufactured by the magnesium powders, it is important to control and understand the densification behavior of the powders. The effect of the sheath surrounding the magnesium powders on the plastic deformation and densification behavior during equal channel angular pressing was investigated in the study by experimental and the finite element methods. A modified version of Lee-Kim's plastic yield criterion, notably known as the critical relative density model, was applied to simulate the densification behavior of magnesium powders. In addition, a new approach that extracts the mechanical characteristics of both the powder and the matrix was developed. The model was implemented into the finite element method, with which powder compaction under equal channel angular pressing was simulated.