Magnesium alloys have been the target of the automotive industry in the last decades because of their low density, high specific strength, excellent machinability, high stiffness and good castability. However, special focus was given on applications at high temperatures such as transmission engines, where conventional magnesium alloys are limited due to their poor strength and creep resistance. Rare earth additions on magnesium alloys fulfils these requirements because Mg-RE alloys have increased tensile strength, ductility, creep resistance and stability at high temperature. The Investigation, exploitation, application and prospect of excellent properties of magnesium-rare earth alloy as a structure material are reviewed for the rich sources of magnesium and rare earth in our country. At the same time, national development suggestion of magnesium-rare earth alloy is proposed according to the research progress at Changchun Institute of Applied Chemistry and other units in our country and abroad.