MgxYyGd (x+y=15 wt.%) alloys were produced via permanent mould casting to investigate the microstructure evolution during solidification of the ternary system. The microstructure of the as-solidified samples was characterized with scanning electron microscopy (SEM) and transmission electron microscopy (TEM). In situ synchrotron radiation diffraction experiments were performed during the solidification of the alloys at the P07 (HEMS) Beamline of PETRA III at DESY. The phase evolution observed during controlled cooling at 20 and 100 K/min and the resultant microstructures were compared with the as-cast conditions. The experimental results were correlated with the calculations from the Pandat thermodynamic software. In the case of the ternary alloys the equilibrium phase diagram suggests the formation of the Mg₂₄Y₅ phase at elevated temperatures followed by the formation of the Mg₅Gd phase at eutectic temperatures. However, the experiment shows only the formation of Mg₂₄Y₅ phase at eutectic temperatures even with a cooling rate (CR) of 100 K/min.