A crystal plasticity finite element method (CPFEM), considering both crystallographic slip and deformation twinning, was developed to simulate the spatial stress concentration in AZ31 Mg alloys during in-plane compression. A predominant twin reorientation (PTR) model was successfully implemented to capture grain reorientation due to deformation twinning in twin-dominated deformation. By using the direct mapping technique for electron backscatter diffraction (EBSD) data, CPFEM can capture the heterogeneity of stress concentration at the grain boundaries in AZ31 Mg alloys during in-plane compression. The model demonstrated that deformation twinning enhances the local stress concentration at the grain boundaries between untwinned and twinned grains.