A dilute Mg-0.68Al-0.32Ca-0.50Mn (AXM070305, wt%) magnesium (Mg) alloy with high strength and excellent ductility was developed by extrusion and subsequent T6 heat treatment. The alloy exhibits a yield strength (YS) of 248 MPa, ultimate tensile strength (UTS) of 288 MPa and elongation to failure (EL) of 21.0%, after T6 peak-aged treatment. The high strength is mainly attributed to the presence of high number density of nanosized β-Mn precipitates, a large number of mono-layered Guinier-Preston (G.P.) zones and planar Al2Ca phase. The excellent ductility is mainly due to the fully recrystallized fine grains with weak basal texture. The peak microhardness of this alloy was reached 67.9 HV after aging at 200 °C for 16 h, due to the precipitation of mono-layered G.P. zone, nanosized particle β-Mn phase and planar Al2Ca phase. •The Al2Ca phase was firstly found to change from particle to planar after T6 treatment.•The present alloy shows the best performance among dilute Mg-Al-Ca-Mn alloys.•The high performance of the AXM070305 was investigated.•G.P. zone and planar Al2Ca phase can promote strength while maintaining ductility.