To modify the coarse primary Mg2Si phase and improve mechanical properties of Mg2Si reinforced aluminum matrix composites, hypereutectic Al–18Mg2Si composites with different Eu contents were fabricated by permanent mold casting and extrusion followed by heat treatment. Results show that the as-cast Al–18Mg2Si composites consisted of primary Mg2Si and eutectic structure (Al + Mg2Si). Eu addition can obviously modify the primary Mg2Si morphology from dendrite to flat truncated octahedron shape, and the average size also decreased from ∼90 μm to ∼16 μm with increasing Eu content from 0 to 0.1%. But further increasing Eu content would cause over-modification. After T6 treatment, sharp corners of primary Mg2Si were spheroidized and the average size of primary Mg2Si were further decreased. DTA result shows the nucleation temperature of primary Mg2Si increased by Eu addition. Al2Si2Eu phase can act as the heterogeneous nucleation substrate for the primary Mg2Si phase and thus refine the size of primary Mg2Si particle. TEM results show the segregation and/or selective adsorption of Eu on the {100} facets of primary Mg2Si suppress the growth of primary Mg2Si, and thus refine and modify the composites, which proposed to the dominant reason for the refinement and modification of the primary Mg2Si phase. Tensile tests show that the mechanical properties enhanced with increasing Eu content. The elongation and ultimate tensile strength of the T6-treated Al–18Mg2Si-0.1Eu composite improved to 5.2% and 241 MPa, which enhanced 225% and 91% compared to the unmodified as-cast Al–18%Mg2Si composite. It is concluded that the morphology transition of primary Mg2Si from dendrite to tetrakaidecahedron and the refinement of primary Mg2Si size with Eu modification, the passivation of the sharp corners in primary Mg2Si particles as well as the appearance of β" precipitates all contribute to the improvement of the mechanical properties of the T6-treated Al–18Mg2Si composites.