The influence of ultrasonic treatment on the microstructure and tensile properties of as-cast Mg-12Gd-0.5Zr alloys was examined. The results indicate that ultrasonic treatment markedly refines the α-Mg grain structure, with the finest grains observed at an input power of 1500 W. This grain refinement is attributed to the combined effects of cavitation and acoustic streaming, which promote heterogeneous nucleation. Furthermore, the treatment reduces the size and number of the secondary Mg₅Gd phase while enhancing its spatial uniformity. A considerable dissolution of Gd atoms into the α-Mg matrix is also observed, likely due to the suppression of Gd segregation by acoustic streaming. Correspondingly, ultrasonic treatment yields notable improvements in ultimate tensile strength, yield strength, and elongation at room temperature. These improvements are primarily attributed to the refined microstructure and the increased solid solubility of Gd within the matrix.