The AE42 magnesium alloy was developed for high pressure die casting (HPDC) from low-aluminum magnesium alloys. In this alloy the rare earth (RE) elements were shown to increase creep resistance by forming Al_xRE_y intermetallics along the grain boundaries. The present work investigates the microstructure of squeeze cast AE42 magnesium alloy and evaluates its hardness before and after heat treatments. The change in hardness is discussed based on the microstructural observations. Some suggestions are given concerning future design of alloy compositions in order to improve high temperature creep properties even further. It is shown that the microstructure of the squeeze-cast AE42 alloy is stable at high temperature 450 °C. The subsequent solution and ageing treatments have a limited effect on the hardness. The weak age-hardening is attributed to the precipitation of small amount of Mg₁₇Al₁₂-phase with the use of about 0.7 wt.% aluminum. The heat treatment to achieve a maximum increase in the hardness is: solution treatment at 450 °C for 5-10 h followed by an ageing treatment at 190-220 °C for about 5 h.