A coupled finite element analysis in conjunction with experiments was used to investigate hot co-extrusion of a novel composite Mg AZ80/Al 1100 billet assembly. To validate the computational model, results from both radiography, and metallography were used. It is demonstrated that the billet configuration proposed in this study results in a uniform composite rod, with no indication of cracks, tears, wavy interface surfaces or voids. The computational model is first validated by the experiments and then used to thoroughly study the thermo-mechanical fields that develop during the co-extrusion process. The interplay of the thermal and mechanical fields during the process is examined for different initial temperatures, die angle and ram velocity. It is demonstrated that using the proposed billet assembly, constant compressive radial stress develops across the magnesium core, leading to sound-proportional flow conditions.