The effects of Nd or Zr addition on microstructure and mechanical properties of casting Mg-Zn-RE alloy have been investigated. The results indicate that the optimum contents of Nd and Zr are 0.5% and 0.3% respectively. The less or higher contents all increase grain size and accelerate the formation of shrinkage porosity, and thus decrease tensile properties and change fracture regime from transgranular mode to intergranular mode during tensile tests. The Mg-Zn-RE ternary phases transform from W (Mg 3 Zn 3 (Nd,Y) 2 ) in turn into W + Z (Mg 12 Zn(Nd,Y)) and Z as the Nd content increases and their distribution gradually changes from small discontinuous lath form to continuous network form. The grain bonding strength of an alloy with a certain amount of W phase that distributes in a discontinuous form is high than that of the alloy with the Z phase, and thus the W phase is an ideal strengthening phase. The alloy with 0.5 Nd and 0.3% Zr, named ZW21 alloy, has the smallest grains and highest grain bonding strength, and so has the highest comprehensive mechanical properties.