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The effects of Bi on the microstructure and mechanical properties of AZ80-2Sn alloy were investigated. The results show that the addition of Bi within the as-cast AZ80-2Sn alloy promotes the formation of Mg3Bi2 phase, which can refine the grains and make the eutectic phases discontinuous. The addition of 0.5 % Bi within the as-extruded AZ80-2Sn alloy, the average grain size decreases to 12 μm and the fine granular Mg17Al12 and Mg3Bi2 phases are dispersed in the α-Mg matrix. With an increase in Bi content, the Mg17Al12 and Mg3Bi2 phases become coarsened and the grain size increases. The as-extruded AZ80-2Sn-0.5 %Bi alloy has the optimal properties, and the ultimate tensile strength, yield strength and elongation are 379.6 MPa, 247.1 MPa and 14.8 %, respectively.