To develop low‐cost and ultrahigh strength magnesium alloys, AE42 (Mg‐4Al‐2RE) alloy is modified by adding Ca (Mg‐4Al‐0.5RE (RE = Y, Ce)‐xCa (x = 0.3, 0.8, and 1.5)) to replace the majority of rare earth elements. The microstructures of squeeze‐cast AE42 and Mg‐4Al‐0.5RE‐xCa alloys are investigated by XRD, EPMA, and SEM, respectively. The corrosion behaviors of all alloys are studied by gravimetric measurements and electrochemical tests. Results show that the microstructure difference between AE42 and Mg‐4Al‐0.5RE‐xCa alloys is that with the addition of Ca, dendritic and acicular Al‐RE phases are suppressed and thin acicular Al2Ca or bone‐shaped (Mg, Al)2Ca phases are formed. Because the reduction of Al‐RE phases can decrease the number of cathode and the Ca‐containing phases have lower potential, the corrosion resistance of Mg‐Al‐0.5RE‐xCa alloys is significantly better than that of AE42 alloy. The alloy with 0.8 wt% Ca addition shows the best corrosion resistance, which can be attributed to the effect of mixed oxide film of RE and Ca and moderate Al2Ca phase discontinuously distributed on the grain boundaries.