The paper presents results of TEM and XRD investigations of Elektron 21 magnesium alloy in as cast condition and after long-term annealing at 250 and 350°C. In as cast condition Elektron 21 consists of primary α-Mg solid solution with α-Mg-Mg3RE eutectic and regular precipitates of MgRE3. Precipitation at 250 °C causes formation of the equilibrium β phase. Annealing at 350°C caused precipitation of globular Mg41Nd5 phases on solid solution grain boundaries. Also precipitates of MgRE3 phase have been observed.