Since the commercial application of rare earth magnesium alloys is increasing gradually, there are considerable advantages to prepare lower cost and higher performance magnesium alloys with a high abundance rare earth (RE) elements. However, the addition of RE elements completely changes the alloying order of the matrix magnesium alloy. Therefore, further study the strengthening mechanism of Ce element on magnesium alloy is required. In this work, thermodynamic stability of the may exist Mg-Ce, Al-Ce and Mg-Al phases were analyzed based on first-principles calculations, and the results were examined through SEM, XRD, EDS and other experimental methods. Moreover, the compositions and precipitation sequence of the key RE phases were deduced as consequence. Then, whether the preferentially precipitated second phase can be the nucleating core of primary α-Mg was discussed based on the mismatch theory, and the modification mechanism of Ce on magnesium alloy was revealed as result. On the other hand, the complex alloying problem in multi-component magnesium alloy system was simplified with the aid of electronegativity theory, which was associated with the alloying reactions at different temperature stages based on Al-Ce, Mg-Al binary phase diagrams and Al-Ce-Mn ternary phase diagrams. Accordingly, the strengthening mechanism of the Ce addition on magnesium alloys was clarified with the temperature as a dimension. The results of this work showed that large numbers of needle-like Al11Ce3 phase or rod-like Al10Ce2Mn7 phases would form preferentially and distribute along the grain boundaries or through grains after the adding of Ce element. However, the preferentially precipitated Al11Ce3 and Al10Ce2Mn7 phases cannot be the nucleating core of primary α-Mg which means the grain refinement mechanism was that the second phase at grain boundary prevents the growth of magnesium grain. Besides, the tensile test results showed that the formation of an Al-Ce phase and Mg-Al phase reinforced hybrid structure is beneficial to improve the ambient temperature and high-temperature mechanical properties of magnesium alloys, which could achieve by adjusting the amount of Ce element added.