This study investigates the improvement of plasticity in body-centered cubic magnesium (Mg)-lithium (Li)-aluminum (Al) alloys, crucial for lightweight structural applications. The ternary Mg-Li-Al alloys exhibits high strength but low ductility. Precipitates at grain boundaries in these alloys, linked to reduced plasticity, are examined for their crystal structure and composition. Advanced microscopic techniques reveal the transformation of precipitates and the development of specific structures at grain boundaries. Thermodynamics of element diffusion at grain boundaries are explored through first-principles calculations, and a phase-field simulation models precipitate evolution. Molecular dynamics simulations elucidate nanoscale mechanisms governing the transition from brittle to ductile fracture modes during artificial aging. The D03−Mg3Al at grain boundaries is a brittle phase, and through a 170 °C aging treatment, it induces the precipitation of lamellar α-Mg phase with D03−Mg3Al as nucleation sites. The occupancy energy of Al atoms at Li sites in α-Mg is found to be lower than that in D03−Mg3Al, leading to the dissolution of D03−Mg3Al. The α-Mg, characterized by a stronger metallic nature, exhibits a better-matched modulus with the matrix and enhanced dislocation mobility. The precipitation of α-Mg plays a pivotal role in significantly improving the ductility of the alloy. This work contributes to the understanding of the complex interplay between alloy composition, grain boundary precipitates, and plasticity, as well as brings insights to guide interfacial control in the development of advanced Mg-Li-Al alloys for structural applications.