In this work, nano-crystalline Mg-Al-Nd alloys were fabricated using mechanical alloying method. Phase structure of the extruded rods was examined using X-ray diffraction (XRD) and the microstructures were observed using transmission electronic microscopy (TEM). The element distributions were also examined by an energy dispersive spectroscopy (EDS) system. The results showed that nano-crystalline Mg-Al-Nd alloys were successfully fabricated using the mechanical alloying method. The grain size of the Mg-Al-Nd alloys could be reduced from a few microns down to about 150nm after 30 hours ball milling. There was a reduction of grain size with increasing Nd content from 0.5 to 5%. Higher yield strength was obtained in the alloys with a high Nd content due to grain refinement and Nd rich precipitate phases.