The microstructure evolution of Mg-Al-Ca alloys modified by the addition of strontium was investigated. It was found that Sr addition leads to the coarsening of α-Mg matrix. However, with the Sr content increasing from 0.1% to 0.5%, the grain size decreases from 83.9 to 65.8 μm. The addition of Sr ranging from 0.1% to 0.3% refines the Al2Ca phase. It changes the morphology of the Al2Ca phase from bone-shaped to granular or banding, and increases its volume fraction. The decrease of grain size of the α-Mg matrix is due to the increase of the effective undercooling degree of the melt and the constitutional undercooling in a diffusion layer ahead of the advancing solid/liquid interface in the alloy modified by the Sr additions. The modification mechanism of Al2Ca is attributed to the adsorption of Sr additions to the Al2Ca crystal. When the Sr content increases to 0.5%, the alloy is over-modified.