A numerical model is developed to describe the kinetics of the microstructure evolution in an atomized droplet of Mg-9wt%Al alloy. The model is coupled with the heat transfer controlling equations to simulate the solidification process of the atomized droplets. The numerical results show that the microstructure development is a result of the common action of the nucleation and growth of grains. The nucleation events take place at a critical supercooling for a given droplet. As the droplet size decreases, the critical supercooling increases significantly. The volume fractions of the phases formed during the period of the recalescence, the segregated solidification and the eutectic reaction are sensitive to the droplet size. It is demonstrated that the developed model describes the microstructure evolution process well.