High-resolution transmission electron microscopy (HRTEM), X-ray diffractometry (XRD), energy dispersive spectroscopy (EDS), and hardness testing are used to investigate the evolution of the long strip-shaped S' phase of spray-formed fine-grained Al-Cu-Mg alloy during rapid cold stamping deformation. The elongated S' phase of the extruded Al-Cu-Mg alloy is subjected to twisting, brittle fracturing, redissolution, and necking during rapid cold stamping deformation. As a result, the morphology, size, distribution, and orientation relationship with the matrix of the long strip-shaped S' phase changed significantly. The regularly distributed long strip-shaped nanoscale precipitates evolved into irregularly distributed short rod-shaped S' phases and diffusely distributed granular reprecipitates. The twist and brittle fracture of the long strip-shaped S' phase significantly increased the contact surface between the precipitated phase and the aluminum matrix, improved the interfacial distortion energy of the precipitated phase and the aluminum matrix, and promoted the redissolution of the S' phase. The supersaturation state is reached, thus resulting in reprecipitation, which then lowered the matrix free energy. The hardness of the extruded Al-Cu-Mg alloy increased from 54.2 HB to 128.1 HB during the rapid cold stamping process.