This study focuses on the eutectic Al-14Cu-7Ce alloy to investigate the evolution of its microstructure and the changes in thermal conductivity and mechanical properties by adjusting the amount of Mg element added. The results show that the as-cast Al-14Cu-7Ce alloy is mainly composed of α-Al and Al8CeCu4 phases, with a microstructure consisting of coarse eutectic structure (α-Al + Al8CeCu4). The addition of a small amount of Mg element can refine the eutectic structure and improve its mechanical properties. With an addition of 1.0% Mg, the alloy"s yield strength and tensile strength increase to 164 MPa and 263 MPa, respectively, with an improvement of 29% and 19%. The elongation at break is enhanced to 4.5%, with an improvement of approximately 41%. The thermal conductivity is 130.2 W/(m·K), with a decrease of about 12%. As the Mg element is further increased to 2.0%, the mechanical properties of the alloy decrease, with the yield strength and tensile strength decreasing to 151 MPa and 249 MPa, respectively. The elongation at break decreases to 3.9%, and the thermal conductivity decreases to 108.3 W/(m·K). The decrease in thermal conductivity is mainly due to the solid solution of Mg atoms acting as scattering centers, hindering the movement of electrons within the lattice, and reducing the average free path of electrons and phonons. When the Mg content reaches 2.0%, the Mg reacts with Al and Cu elements to form the Al2MgCu phase, which is distributed in a fishbone-shaped eutectic structure (α-Al + Al2MgCu) at grain boundaries. This increases the volume fraction of the second phase in the alloy and further deteriorates its electrical and thermal conductivity. The decrease in mechanical properties of the alloy is mainly attributed to the presence of two eutectic structures, (α-Al + Al8CeCu4) and (α-Al + Al2MgCu), which increase the occurrence of microcracks at the phase interfaces. In summary, the addition of 1.0% Mg can obtain an Al-Cu-Ce eutectic alloy with high strength and high thermal conductivity.