As-cast AZ80 Mg alloy contains α-Mg, partially divorce eutectic of α and γ (Mg 17Al 12), fully divorce eutectic of α and γ, and lamellar eutectic of α and γ phases. During homogenization, second phase (γ-Mg 17Al 12) gets dissolved can change the mechanical properties. Therefore, the aim of the present work is to bring out the kinetics of dissolution of γ phase and evaluate its effect on mechanical properties. Microstructure evolution during homogenization was investigated as a function of time for 0.5 to 100 h and at the temperatures of 400° and 439°C. In as-cast state, this material was found to contain 70% α-Mg and 30% eutectic phase. With increasing homogenization time, dissolution of lamellar eutectic occurs first which is followed by dissolution of fully divorce eutectic and partially divorce eutectic. The dissolution kinetics of γ phase was analyzed based on the decrease in its volume fraction as a function of time. The time exponent for dissolution was found to be 0.38 and the activation energy for the dissolution of γ phase was found to be 84.1 kJ/mol. This dissolution of γ phase leads to decrease in hardness and tensile strength with increase in homogenization time.