The precipitation of the Mg-8Gd-2Er (wt.%) alloy at 200 ℃ was investigated by transmission electron microscopy (TEM) and X-ray diffraction (XRD). The precipitation sequence was described as supersaturated solid solution (S.S.S.S., cph)→β(D019)→β(bco)→ β-phase(fcc), which was different from previously reported four stages sequence: (S.S.S.S., cph)→β(DO19)→β(bco)→β(fcc)→β-phase(fcc). The morphologies and crystal structures of both β' and,β precipitates in the alloy were studied in the present investigation. The orientation relationship between the precipitate phases and the α-matrix was observed. The ultimate tensile strength (UTS) and tensile yield strength (TYS) of the as-cast alloy were 189 and 110 MPa, respectively, and the UTS and the YTS were improved greatly after ageing treatment. The values of UTS and YTS after peak ageing process were 308 and 246 MPa, respectively. The improved mechanical properties were mainly ascribed to the formation of β phase. The age hardening response decreased with increasing ageing time because the β phase got coarse as ageing time increased.