Significant grain refinement in Mg-3Al alloy is achieved with the addition of charcoal due to the formation of Al4C3 particles, which act as effective nuclei for magnesium grains. Addition of 0.5wt% charcoal has lead to reduced grain size of Mg-3Al alloy from 500 to 80μm and no substantial grain refinement is obtained on further addition of charcoal. The results further reveal that the prolonged holding of the melt after the addition of charcoal has not affected the grain refining efficiency of Al4C3. Steady increase in tensile properties observed with increasing amount of charcoal addition has been attributed to the grain refinement and the presence of fine Al4C3 particles. The strengthening mechanisms due to charcoal addition are discussed in terms of Hall-Petch relation and dispersion strengthening. The predicted values are in good agreement with experimental results. © 2010 Elsevier B.V.