Abstract: A novel low-cost Mg–Al–Ca–Zn–Mn-based alloy was developed to simultaneously improve its strength and ductility. The high yield strength of 411 MPa and the high elongation to failure of ~8.9% have been achieved in the as-extruded Mg–1.3Al–1.2Ca–0.5Zn–0.6Mn (wt%) sample. Microstructure characterizations showed that the high strength is mainly associated with the ultra-fined dynamically recrystallized (DRXed) grains. Moreover, high-density dislocations in the un-DRXed region and nano-precipitates are distributed among the α-Mg matrix. The high ductility property can be ascribed to the high volume fraction of DRXed grains with a much randomized texture, as well as the formations of high-density subgrains in the un-DRXed grain regions.