Abstract In this study, new erbium modified Mg-Al alloys were developed by integrating trace erbium (in the form of Al_94.67Er_5.33 master alloy) into pure Mg using disintegrated melt deposition technique. The developed Er- modified Mg-Al alloys were investigated for their microstructural, mechanical and corrosion characteristics in comparison with their unmodified counterparts. Microstructural investigation revealed (i) improved purity, (ii) (marginal) grain refinement, (iii) more uniform second phase distribution and (iv) Al₃Er phase formation due to Er modification. Mechanical property measurements revealed an overall enhancement under indentation, tension and compression loads. A remarkable improvement in tensile ductility (without adverse effects on strength) by +19%, +29%, and +58% was obtained in Mg-3Al-0.1Er, Mg-6Al-0.3Er and Mg-9Al-0.5Er when compared to Mg-3Al, Mg-6Al and Mg-9Al respectively. While the Mg-6Al-0.3Er alloy exhibited best ductility, the Mg-9Al-0.5Er has the best strength under both tension and compression loads. Corrosion characteristics evaluated by hydrogen evolution, salt spray and electrochemical impedance experiments revealed improved corrosion resistance of Er modified Mg-Al alloys by the enhanced purity levels and the formation of Al-Er phases.