The effects of contents of Zn and Gd elements and their mass ratios on microstructure and mechanical properties of as-cast and as-extruded Mg-8Li alloys were investigated. After extrusion, the precipitates are broken, and fine spherical particles with size about 100 nm are found to disperse in the β-Li. The bi-modal structure consisting of long-strip-like coarse-grain α-Mg and recrystallized fine-grain β-Li is formed. The strength and plasticity of the alloys are greatly improved after extrusion, and the YS and UTS increase with the increase of Zn and Gd contents. The Mg-8Li-8Zn-2Gd alloy exhibits an optimum comprehensive performance with the YS of 274 MPa, UTS of 283 MPa, and EL of 39.9%. The bi-modal structure strengthening consisting of the fine crystal strengthening of β-Li and texture strengthening of α-Mg, and the dispersion strengthening of precipitations are the main strengthening mechanisms.