Precipitation and strengthening mechanisms in squeeze cast Mg-8.5wt%Li-4.5wt%Al have been investigated by differential scanning calorimetry(DSC), scanning electron microscopy(SEM), in-situ and ex-situ X-ray diffraction analysis and hardness measurement. Special emphasis was placed on the investigation of the precipitation behavior by the DSC technique. Microstructural and calorimetric analysis showed that θ and δ precipitates in the b.c.c. β phase matrix, forming two exothermic peaks at the temperature ranges of 130℃∼180℃ and 236℃∼280℃. θ and δ dissolve into the matrix forming an endothermic peak at the temperature range of 280℃∼352℃. The as-cast microstructure consists of α, β and δ. Peak strength was obtained after aging for 1 hour at 50℃. The aging time required for the peak strength decreased as the aging temperature increases. The hardness decrease during overaging was due to the coarsening of θ precipitates. Microhardness measurement showed that variation of the hardness of β matrix was more pronounced than that of the α phase, indicating that the β phase is more responsible for the strengthening of the Mg-8.5wt%Li-4.5wt%Al alloy.