Introducing amorphous phases into the crystalline matrix is a new design strategy to improve the mechanical properties of Mg alloys. In this work, the effects of strain rate and amorphous nanopillar size on the interaction mechanism between the dislocation and precipitation in the Mg matrix were investigated by molecular dynamics simulation. The results show that the interaction mechanism between dislocation and amorphous precipitation depends on strain rate and amorphous nanopillar size. At strain rates of 5 × 107/s and 5 × 108/s, the amorphous precipitation strengthens the Mg matrix due to the pinning effect of the amorphous precipitation relative to the dislocation. The interaction mechanism changes from merging and canceling of dislocation to the cross-slip mechanism with the increase of precipitation size. Moreover, the strengthening effect of the large-sized amorphous phase on the dislocation is noticeable. However, the amorphous precipitation softens the Mg matrix at strain rates of 5 × 109/s and 1 × 1010/s. The underlying mechanism varies from the dislocation shearing mechanism to the generation of dislocation loops with the increase of the amorphous precipitation size. This research can provide theoretical guidance for developing and designing new high-performance Mg alloys.