Abstract: AE81 rare earth magnesium alloy was prepared by gravity casting method, and the alloy after solution treatment was subjected to rolling deformation at 300℃ and 350℃ for 15%, 20%, 25% and 30%, respectively. The results show that the addition of rare earth element Ce causes the discontinuous distribution of Mg₁₇Al₁₂ phase in the as-cast microstructure, and the Al₄Ce phase in the magnesium matrix exists in the shape of block, hollow tube and needle. After rolling deformation, the volume fraction of the deformed microstructure in AE81 alloy increases with the increase of the reduction amount. When the reduction amount increases to 25%, obvious dynamic recrystallization phenomenon occurs. The average size of the recrystallized grains is mainly distributed between 200 nm and 400 nm, and the dynamic recrystallization region is mainly distributed around the Al₄Ce phase. Meanwhile, the volume fraction of Mg₁₇Al₁₂ precipitated phase increases with the increase of rolling temperature and reduction, and the distribution of Mg₁₇Al₁₂ phase on the matrix is improved.