Nd in the form of powder or intermediate alloy was added to AZ31 wrought alloy. The as-obtained alloy was characterized and tested with respect to its microstructure and mechanical properties. The relationship between the microstructure, mechanical properties and tensile fracture mechanism were discussed, with relevant alloys as reference for comparison. Experimental results show that the same quantity of Nd was added into AZ31 in powder form or in intermediate alloy, the absorption rate of Nd reached only 10.8% for the former case and as high as 95% for the later case. Pure Nd powder was added, no new compound was detected, but it served as reductant and purified alloy melt, resulting in improving the tensile strength while Nd was added into AZ31 as Mg-Nd intermediate alloy. The compound Al2Nd and Mg12 Nd were formed in magnesium alloy, which were distributed in the matrix in the shapes of strip and particle, evidently refined the as-cast structure. The as-cast tensile strength (228MPa) of adding pure Nd powder approximated to the figure (245MPa) of adding Mg-Nd intermediate alloy. The tensile fracture mchanism of as-cast AZ31 transformed from cleavage fracture into quasi-cleavage fracture.