The as cast microstructure of alloy AE42 is composed of the a-Mg matrix and Al 11 RE 3 compound, which is unstable and decomposes to Al 2 RE and Mg 17 Al 12 (b) at temperatures above 150uC. A small amount of calcium added to the AE42 alloy results in a significant microstructure refinement and formation of Al 2 Ca compound, which shows two kinds of morphologies: eutectic lamellar at grain boundaries of the a matrix and tiny lamellar in the matrix grains. With the increase of added calcium the volume fraction of Al 2 Ca increases, while Al 11 RE 3 decreases in the AE42 alloy. Creep resistance of the alloy is significantly improved with calcium addition. The microstructure of the specimen after creep tests at 175uC and 70 MPa with 2% of calcium addition has no obvious changes compared to that before the creep test, indicating Al 2 Ca has high thermal stability, which is the key factor in creep resistance improvement.