Effects of samarium (Sm) content (0, 2.0, 3.5, 5.0, 6.5 wt%) on microstructure and mechanical properties of Mg–0.5Zn–0.5 Zr alloy under as-cast and as-extruded states were thoroughly investigated. Results indicate that grains of the as-cast alloys are gradually refined as Sm content increases. The dominant intermetallic phase changes from Mg ₃ Sm to Mg ₄₁ Sm ₅ till Sm content exceeds 5.0 wt%. The dynamically precipitated intermetallic phase during hot-extrusion in all Sm-containing alloys is Mg ₃ Sm. The intermetallic particles induced by Sm addition could act as heterogeneous nucleation sites for dynamic recrystallization during hot extrusion. They promoted dynamic recrystallization via the particle stimulated nucleation mechanism, and resulted in weakening the basal texture in the as-extruded alloys. Sm addition can significantly enhance the strength of the as-extruded Mg–0.5Zn–0.5 Zr alloy at room temperature, with the optimal dosage of 3.5 wt%. The optimal yield strength (YS) and ultimate tensile strength (UTS) are 368 MPa and 383 MPa, which were enhanced by approximately 23.1% and 20.8% compared with the Sm-free alloy, respectively. Based on microstructural analysis, the dominant strengthening mechanisms are revealed to be grain boundary strengthening and dispersion strengthening.