Deformation behavior of the Mg-8 wt%Li alloy at high strain rate was studied by means of the Split Hopkinson Pressure Bar (with strain rate of 103 s-1). It is found that shear localization proves to be the main damage mode for the alloy during dynamic loading. Strain and strain rate are the two necessary parameters affecting the occurrence of deformation and shear bands. Deformation bands begin to form when the strain and strain rate reach 0.20 and 1 900 s-1 respectively and will develop gradually with the strain rate increasing. Besides, deformation bands will transform into shear bands when the strain and strain rate reach above 0.25 and 3 500 s-1 separately.