The effect of Nd addition on the microstructure and mechanical properties of as-extruded Mg-9Gd-0.5Zr (wt.%) alloy was investigated. The Mg-9Gd-0.5Zr and Mg-9Gd-2Nd-0.5Zr alloys were extruded at 673 K. The elongated non-dynamic recrystallized (un-DRXed) grains disappear after adding Nd, and uniformly distributed dynamic recrystallized grains with a grain size of 1.68 μm were obtained in the alloy. In addition, numerous nano-Mg₅(Gd,Nd) particles were found to precipitate dynamically in the Mg-9Gd-2Nd-0.5Zr alloy, which gave rise to the dynamic recrystallization process via providing nucleation energy through hindering the release of deformation energy and promoting an increase in the strength through the Orowan strengthening mechanism. Moreover, the dynamically recrystallized (DRXed) grains have a weak texture, which plays a significant role in improving the ductility. Therefore, the Nd addition favors the improvement of strength and elongation for the as-extruded Mg-9Gd-0.5Zr alloy, simultaneously.