The effects of rare earth elements on the microstructure and properties of magnesium alloy AM60B alloy were studied. Different proportions of rare earth elements were added to AM60B and the tensile tests were carried out under different temperatures. The experimental results show that at room temperature the tensile strength of AM60B can be improved with the addition of rare earth elements. The ductility of which at room or elevated temperature (120℃) can also be improved, and the ductility is to some extent in proportion with the amount of rare earth elements. The ductility at 120℃ is better than that at room temperature. The microstructure graphs demonstrate that appropriate amount of rare earth elements (0.1%-0.2%, mass fraction) can fine AM60B's grain and improve its ductility.