Magnesium matrix composites have great potential for aerospace and automotive applications due to its low density and superior specific stiffness. The magnesium composites can often be reinforced by either particles or/and fibers. There were certain studies on solidification behaviors of particle-reinforced magnesium composites in the past. However, development of grain structure during the solidification of fibre-reinforced magnesium is barely investigated. In this work, an Al2O3 fiber reinforced magnesium (AM60) matrix composite (AM60/Al2O3,f) was cast. The solidification behavior of the cast AM60/Al2O3,f composite was investigated by computer-based thermal analysis. Optical and scanning electron microscopy (SEM) and differential scanning calorimetry (DSC) were employed to examine the occurrence of nucleation and grain refinement involved in solidification of the composite. The results show that the addition of Al2O3 fibers leads to the formation of fine grain structure in the matrix of the AM60/Al2O3,f composite. The refinement of grain structure should be primarily attributed to the restriction of grain growth by the limited cellular space formed in the skeleton of the fiber preform structure instead of the nucleation of primary -Mg phase directly on Al2O3 fibers.