Mg alloys have been extensively used in lightweight manufacturing owing to excellent mechanical properties. However, liquation cracking occurred during welding of dissimilar Mg alloys, significantly deteriorating mechanical properties. The temperature-stress distribution and generation law of liquation cracking in circular-patch welding of dissimilar Mg alloys were investigated by a combination of numerical simulation and experimental work. The peak temperature in the partially melted zone 0–2.5 mm from the outside of the weld exceeded 710 K (eutectic temperature of AZ91), which is prone to eutectic liquation. The radial tensile stress exerted on the partially melted zone during the cooling process. The peak value of radial tensile stress in the last stage of solidification of eutectic liquid phase reached about 24.4 MPa. Heat treatment before welding was used to dissolve the intermetallic compounds γ(Mg17Al12) to prevent liquation cracking.