A series of Mg-6Al-2Sr-1.5Y-xNd (x=0, 0.3, 0.6, 0.9, 1.2) alloy samples were prepared and their microstructures were observed and mechanical properties were measured. The existing forms of Y and Nd were studied. The effects of Y and Nd on microstructure and mechanical properties of AJ62 alloy were investigated. The results show that the main existing forms of Y and Nd in AJ62 alloy are Al2Y and Al2Nd. The combined addition of rare earth Y and Nd can refine α-Mg matrix obviously and reduce the amount of the β-Mg17Al12 phases; after solid solution treatment, the tensile strength of the alloys rise first and fall later with increasing content of Nd. When the content of Nd is about 0.6%wt, the values of tensile strengthes are up to the maximum both at room temperature and at 448 K.