Neodymium, a Rare Earth with low solid solubility in Mg is an ideal alloying element to improve the yield strength and creep resistance cost effectively. The addition of Zn achieves a further improvement; however, its influence on the intermetallic phases in the Mg–Nd–Zn ternary system is not yet fully understood. A Mg-5Nd alloy modified with 3, 5 and 7 wt% of Zn was investigated with in situ synchrotron radiation diffraction during cooling from the molten state to 200 °C in order to investigate the phase-formation and -transformation characteristics of the alloys. The synchrotron diffraction results have been complemented with TEM investigations on the as-solidified samples. The results suggest that Zn has a strong effect on the microstructure by stabilizing the Mg₃Nd phase and accelerating the precipitation formation. The experimental results do not fully comply with the theoretical calculations, indicating the necessity of improving the thermodynamic databank for this alloy system.