The calculated phase diagrams of Al-17%Si alloy with additions of Mg up to 10 wt% Mg have indicated two critical compositions at 4.6 and 6.8% Mg where the liquidus, the binary reaction temperatures as well as the temperature range of the formation of Mg2Si particles are changed. The eutectic formation temperature is decreased with the addition of Mg up to 4.6% Mg, followed by constant value due to the change of the eutectic formation reaction from the binary (Liq. -> Al +/- A Si) to the ternary (Liq. -> Al + Si + Mg2Si) reaction. This change contributes to the transformation of the eutectic silicon in matrix from long platelet, to fine and compact particles resulting in overall increased hardness of the high Mg alloys even though the hardness of the primary Mg2Si particles is much smaller than that of the primary silicon particles. A pronounced decrease of both primary and eutectic silicon particles size was also observed for 0.4% Mg alloy when compared to the base alloy showing significant microstructural modification.