The Mg-3%Al melt was inoculated by carbon combining with Sr addition. The trace impurity Fe was introduced into the melt and the holding time after carbon-inoculation was adjusted. The effect of impurity Fe on grain refinement and structure characteristics of the nucleating particle was studied by adjusting the sequence of Fe introduction and holding time. The results show that the Mg-3%Al alloy was significantly refined by carbon inoculation combining with Sr addition. The addition of impurity Fe and its sequence had no obvious effect on the grain refinement. The grain size was refined from 560 μm to the range between 100 and 130 μm. The grain size after been inoculated kept stable with increasing in the holding time to 80 min. The presence of Sr could effectively inhibit the adverse effects of Fe-induced grain coarsening and accelerating the fading of carbon inoculation. There existed two types of particles could be easily observed in the inoculated Mg-3%Alloy containing with trace Fe impurity. One was the Al₄C₃ particles. The other one is dual-phased particles of Al-Fe phase coated with Al₄C₃. Both of the particles should be the potent nuclei of α-Mg grains. Higher Sr content in the particles was measured. Active element Sr easily segregate and enrich towards the surface of particles, reducing the surface energy and interfacial energy of particles. The segregation of Sr can promote the formation of dual-phase particles and improve the stability of potent nuclei. Consequently, the Fe-induced nuclei-poisoning and the fading of inoculation could be effectively inhibited due to Sr addition in the carbon-inoculated Mg-Al melt.