Microstructures and mechanical properties of the Mg9AlZnY magnesium alloy in lost foam casting were researched through adding rare-earth element Gd. The results show that the β-Mg17Al12 phase of Mg9AlZnY alloy is significantly reduced with the increase of Gd element, and the formation of β-Mg17Al12 phase turns into an intermittent and granular structure from the continuous network structure. Microstructure of the Mg9AlZnY alloys containing Gd is mainly composed of the α-Mg solid solution, β-Mg17Al12 phase and a small number of rod-like Al2Y and block-like Al2Gd phases which are distributed over grain boundaries of the α-Mg phase. The Al2Y and Al2Gd phases, which pin the grain boundary at high temperature and prevent grain boundary from sliding, have good thermal stability, increasing the high-temperature strength of the grain boundary. After T6 heat treatment, the tensile strength at room temperature is 235 MPa and the high-temperature strength at 200 oC is 156 MPa when the rare-earth element Gd is about 0.9%, which is increased by 11.9% and 28.9% compared with those of Mg9AlZnY alloy, respectively