Novel AZ91D Mg alloy/fly-ash cenospheres (AZ91D/FACs) composites were fabricated by melt stir technique. Fly-ash cenosphere particles with 4%, 6%, 8%, 10% in mass fraction and 100 μm in size were used. Hardness and compressive strength of the composites were measured. The effects of mass fraction of cenospheres on the microstructure and compressive properties were characterized. The results show that the cenospheres are uniformly distributed in the matrix and there is no sign of cenosphere cluster or residual pore. The densities of the composites are 1.85-1.92 g/cm3. By comparing with matrix, the compressive yield strength of the composites is improved, and the cenospheres is filled with Mg matrix alloy. SEM, XRD and EDX results of the composites show clear evidence of reaction product at cenosphere/matrix interface. On the basis of XRD and EDX, composition, structure and thermodynamic analysis, the main interfacial phase between the cenosphere and AZ91D Mg alloy was identified to be MgAl2O4.