The microstructure, texture, mechanical properties, and stretch formability of AZ61 magnesium alloy sheets processed by two-pass hot rolling-shearing-bending (T-HRSB) deformation followed by annealing were investigated. After T-HRSB deformation, the initial strong basal texture in the AZ61 magnesium alloy sheet was significantly weakened, accompanied by the simultaneous formation of a non-basal RD-texture component (c-axis//RD). The mechanism underlying the formation of this RD-texture component was also discussed. After recrystallization annealing, the T-HRSB processed magnesium alloy sheet exhibited an almost complete absence of both the initial basal texture component and the newly formed RD-texture component. Instead, a novel RD-split non-basal texture emerged, characterized by a basal pole tilted approximately 36 degrees away from the ND toward the RD, along with significantly broadened contour lines. This distinctive RD-split texture was found to contribute to the excellent room temperature stretch formability of the AZ61 magnesium alloy sheet. In addition, the influence of texture on the mechanical properties and stretch formability of the AZ61 Mg alloy sheet at room temperature was investigated. The primary outcomes demonstrated considerable texture evolution, which enhanced the formability and mechanical performance of the Mg alloy. Additionally, the research offers insights into texture-property relationships and non-basal texture formation mechanisms in wrought Mg alloys.