In this study, the microstructure evolution and mechanical behaviour of Mg-1.5Al-xwt%La-Mn (ALaM-x) (x = 0.5, 1, and 2) alloys with low-cost were investigated. Microstructure analysis of the cast alloys revealed that the Al11La3 was preferentially precipitated, followed by Al2La, and finally Mg12La, as the Al/La ratio decreased. Nonetheless, the main precipitated phase in the alloy was Al11La3 phase, and it gradually coarsened and the content increased, with the increase of La content. The fine rod-like Al11La3 was broken and refined after extrusion, while the coarse Al11La3 was not completely broken, and aggregated unevenly within Mg matrix. As a result, the grain size of the alloys gradually increased, and the strength gradually decreased. When adding 0.5 wt%La, compared with pure Mg, the ALaM-0.5 alloy exhibited finer grain microstructure with an average size of 1.83 μm and a grain refinement rate of 90%; the corresponding tensile yield strength (TYS) and ultimate tensile strength (UTS) are 262.5±3.0 MPa and 275.0±2.4 MPa, with an increase rate of 124.7% and 52.1%, respectively. The calculation and analysis of strengthening mechanism showed that the high strength of the alloy was mainly attributed to fine-grained strengthening with an accounting for up to 42%. Besides, the inverse relationship between the square root of the reciprocal of grain size (d−1/2) and strain hardening exponents (n) was found in this study, and the precipitates were found to delay the weakening trend of strain hardening capacity with decreasing grain size.