Changes in microstructure and damping capacity with aging time for solutionized AZ91 (Mg-9%Al-1%Zn-0.2%Mn) alloy have been investigated based on experimental results from optical micrography, X-ray diffractometry, hardness test and damping capacity measurement vibrating in a flexural mode. Discontinuous β (Mg17Al12) precipitates form along the primary grain boundaries, the amount of which increases as the aging time increases. The hardness of α matrix with respect to aging shows a typical “S” shape, indicating a generation of fine continuous precipitation in the matrix during aging. The peak level of damping capacity for the AZ91 alloy is obtained after 1 hour of aging, over which the damping capacity becomes deteriorated continuously. The optimum density of continuous β precipitates with fine morphology, which may well act as pinning points for dislocation lines, might be responsible for the improvement of damping capacity.