Minor addition of Gd and Zn can significantly improve the mechanical properties of extruded Mg-1 wt.%Gd-xZn (x = 0, 0.5, 1 wt.%) alloys. However, how they modify the structure of alloys remains elusive. By using x-ray absorption fine structure, we found that Zn atoms tend to bond with Gd and the 0.5 wt.% Zn addition greatly reduces the coordination number (CN) of Gd atoms, forming an enhanced double solid-solution strengthening. Whereas, 1 wt.% Zn not only increases the CNs of Zn and Gd but also promotes the formation of minor Mg3Zn3Gd2 phase. Compared with the grain refinement strengthening, it is found that the solid solution strengthening is not a dominant factor.