A new flux was developed specially for recycling of scrap magnesium alloy AZ91 with high iron content. JDMJ in the flux could effectively remove inclusions from the recycled magnesium alloy and its proper addition was about 2.0 wt%. Excessive addition of the flux would result in flux inclusion in the recycled magnesium alloy. B2O3 in the flux made the iron concentration in the scrap magnesium alloy decrease from 0.044 wt% to about 0.002 wt% during recycling and its optimal addition was 0.3 wt% by Gaussian Fitting. The tensile properties of the recycled magnesium alloy were greatly improved by about 35%. Weight loss measurement, potentiodynamic study and pitting morphology examination revealed that the corrosion resistance of the recycled magnesium alloy was also greatly improved. The mechanisms of inclusion removing and iron reducing in the scrap magnesium alloy during recycling were discussed thermodynamically and formation of FeB was confirmed as the main reason for iron reducing in the recycled magnesium alloy AZ91 by XRD analysis. (C) 2004 Kluwer Academic Publishers.