Gadolinium (Gd) (up to 10 wt.%) was added to Mg-7Li dual-phase alloys, and the Gd-containing alloys were heat-treated for 3 h at 698 -748 K. The microstructure and mechanical properties of the as-cast and heat-treated alloys were then examined. The results indicated that the addition of Gd introduced the Mg 3 Gd phase into the duplex Mg-7Li alloy, containing a-Mg and b-Li phases. Gd also refined the grains, and the addition of 8 wt.% Gd resulted in the highest grain refining effect. The Gd atoms in the a-Mg phase, as well as precipitates in b-Li matrixes and at the surface of the a-Mg phase, strengthened the alloys. The highest strength alloy was obtained after the addition of 6 wt.% Gd, with tensile and compressive yield strengths of 143- 147 MPa, about twice as those of the Mg-7Li alloy. Heat treatment, which was found to be optimum at 723 K for 3 h, can decrease both the amount of precipitate and the hardness of the alloy, but not the amount of the Mg 3 Gd phase.