Crystallographic texture engineering is a key strategy for enhancing the mechanical properties of polycrystalline magnesium (Mg) alloys. Due to the intrinsic anisotropy of the hexagonal close-packed (HCP) structure, the deformation behavior of Mg alloys is significantly governed by individual grain deformation and multi-grain interactions, both dictated by crystallographic texture. In the current study, enhanced ductility was achieved in a Mg-Al-Zn-Mn dilute alloy by tailoring a strong basal texture into a transverse-direction-spread elliptical texture through the minor addition of yttrium (Y). Systematic quasi-in-situ electron backscatter diffraction (EBSD) and dislocation/disclination density analyses were performed to examine the microstructural evolution during deformation. We found that disclinations emerge from defect reactions, including dislocation-grain boundary (GB) and twin-GB interactions, which facilitate twinning plasticity and intergranular accommodation in the elliptical-textured alloy, resulting in improved work-hardening capacity and higher ductility (28.5% along the rolling direction and 32.2% along the transverse direction). By introducing disclination analysis to elucidate defect reactions, multi-grain interactions and the associated microstructure-property relationships in polycrystalline metals, our work provides new insights into the design of advanced Mg alloys with enhanced ductility and formability through crystallographic texture engineering.