The effects of nickel addition to magnesium in the hypoeutectic range were investigated in the as-cast and extruded conditions. At low Ni content of 5 wt-%, the grain-boundary eutectics were present in the grain refined α-Mg matrix; while at high Ni content of 15 wt-%, the eutectic constituent became the matrix of the alloy with the appearance of α-Mg rosettes. The addition of Ni up to 15 wt-% led to a significant enhancement of the strength-ductility balance. Moreover, the formation of long Mg2Ni particles at the boundaries of eutectic colonies was explained based on the cooling curve thermal analysis results. Furthermore, remarkable grain refinement by dynamic recrystallisation (DRX) and fragmentation/dispersion of intermetallic particles during hot extrusion led to the improvement of tensile strength, ductility, and toughness.