<p>The microstructural evolution and mechanical properties of Mg–8.0Al–<i>x</i>Yb–0.5Zn (wt%, <i>x</i> = 0, 1, 2) cast alloys were investigated. With increasing Yb content, a significant grain refinement was observed, accompanied by the continuous refinement and fragmentation of the initial <i>β</i>-Mg₁₇Al₁₂ phase network. Concurrently, the Al₃Yb phase formed and coarsened. Calculations including formation enthalpy and lattice misfit, confirm that the Al₃Yb phase, which nucleates prior to the <i>α</i>-Mg and <i>β</i>-Mg₁₇Al₁₂ phases and exhibits a low lattice misfit with their low-index planes, serves as an effective heterogeneous nucleation site, significantly contributing to the observed microstructural refinement. Furthermore, Yb addition fundamentally suppresses constitutional supercooling by consuming Al atoms, which possess a high growth restriction factor, for the formation of Al–Yb phases. Subsequent tensile testing reveals that Yb solute promotes the generation of extension twins and the accumulation of dislocations during deformation, leading to a marked enhancement in the work-hardening capacity of the Yb-containing alloys. Benefiting from the refined microstructure and enhanced work hardening, the Mg–8.0Al–1.0Yb–0.5Zn alloy exhibits a favorable balance between mechanical strength and ductility, achieving an ultimate tensile strength of ~ 249.8&#xa0;MPa and an elongation of ~ 11.70%, respectively.</p>