The corrosion behavior of a new Mg-9Al-1Zn (AZ91) magnesium alloy containing neodymium (Nd) is investigated by scanning electron microscopy (SEM), X-ray diffraction (XRD), X-ray photoelectron spectroscopy (XPS), immersion tests and electrochemical experiments. The results indicate that Nd decreases the size and volume fraction of the beta (Mg17Al12) phase and forms Al2Nd in the alloy. In addition, during corrosion, Nd is incorporated into corrosion film in the form of Nd2O3. AZ91 alloy containing 1.0 wt.% Nd possesses an outstanding passivation property and excellent corrosion resistance. The corrosion resistance enhancement is attributed to the reduction in the size and volume fraction of the beta phase and the incorporation of Nd2O3 in the corrosion film.