The lattice parameters, phase content, and tensile properties of as-cast Mg–xGd–(4–x)Y–2Al (x = 0, 2, 4) alloys were investigated via X-ray diffraction, Rietveld refinement, scanning electron microscopy, and transmission electron microscopy. The Mg-RE phase, Al2RE phase, and Al11RE3 phase occurred in all three alloys. Furthermore, the cell volume and axial ratio (c/a) of the α-Mg matrix decreased with increasing (0–4 wt.%) Gd content. The abundance of the Al2RE and Mg-RE phases decreased with increasing Gd content, whereas that of the Al11RE3 phase increased. Moreover, Al2RE particles formed at the grain centers served as active nucleation sites, thereby leading to grain refinement, and acicular Al11RE3 phases restricted the growth of α-Mg. The tensile properties improved with increasing Gd content. In fact, the optimal mechanical properties (yield strength: 77.83 MPa, ultimate tensile strength: 195.01 MPa, and elongation: 15.71 %) were obtained for the Mg–4Gd–2Al alloy. Furthermore, strengthening of the material occurred mainly via second-phase strengthening and solid-solution strengthening. Block Al2RE particles can cut the matrix during the stretching process, and the acicular Al11RE3 phase may play a major role in enhancing the tensile properties. In addition, the ductility of the alloy system improved with decreasing axial ratio (c/a).