Precipitation and strengthening mechanisms in squeeze cast Mg-8.5wt%Li-4.5wt%Al have been investigated by differential scanning calorimetry(DSC), scanning electron microscopy(SEM), in-situ and ex-situ X-ray diffraction analysis and hardness measurement. Special emphasis was placed on the investigation of the precipitation behavior by the DSC technique. Microstructural and calorimetric analysis showed that ${ heta}$ and ${delta}$ precipitates in the b.c.c. ${eta}$ phase matrix, forming two exothermic peaks at the temperature ranges of $130^{circ}C{sim}180^{circ}C$ and $236^{circ}C{sim}280^{circ}C$. ${ heta}$ and ${delta}$ dissolve into the matrix forming an endothermic peak at the temperature range of $280^{circ}C{sim}352^{circ}C$. The as-cast microstructure consists of ${alpha}$, ${eta}$ and ${delta}$. Peak strength was obtained after aging for 1 hour at $50^{circ}C$. The aging time required for the peak strength decreased as the aging temperature increases. The hardness decrease during overaging was due to the coarsening of ${ heta}$ precipitates. Microhardness measurement showed that variation of the hardness of ${eta}$ matrix was more pronounced than that of the ${alpha}$ phase, indicating that the ${eta}$ phase is more responsible for the strengthening of the Mg-8.5wt%Li-4.5wt%Al alloy.