In this paper, the microstructure evolution of the Mg-Al-Zn-Nd alloys were characterized by XRD, SEM and TEM, and the strengthening behavior of the rare earth phases in the alloys was studied. Results show that the microstructure consists of the α-Mg, Mg17Al12, Al2Nd and Al11Nd3 phases in the experimental alloys. Meanwhile, as the content of Nd element increasing, the size and the number of the Mg17Al12 phase gradually decrease, however, the number of the dispersed Al2Nd and Al11Nd3 phases increase. Moreover, the shape of the Al11Nd3 phase changes from needle-like to the rod-like with the Nd increasing, and the semi-coherent interface between Al11Nd3 phase and matrix Mg exists strong binding ability. Furthermore, the strengthening behavior of the rare-earth-containing phases includes the following aspects: (1) During tension, the increase of stress concentration around the rare-earth-containing phases may induce the formation of twin around the matrix Mg, which can coordinate the increase of some external strain energy. (2) Compared with Mg17Al12 phase, the hard rare-earth-containing phases with good binding ability initiate micro-cracks hardly, therefore, the dispersed rare-earth-containing phases play an important role of pinning dislocation movement. (3) The increasing number of the rare-earth-containing phases results in the decreasing number of the micro-cracks sources, where the micro-cracks sources initiated at the interface between matrix and eutectic structure (M/E), as well as the island-like Mg17Al12 phase. Finally, the mechanical properties of the Mg17Al12, the Al2Nd and the Al11Nd3 phases were calculated and briefly discussed.