Influences of aluminum carbide ($Al_4C_3$) addition on microstructure and damping capacity of Mg-3%Al casting alloy have been investigated based on experimental results of optical micrography, scanning electron microscopy with energy-dispersive spectrometry analysis and damping capacity measurement at RT. The addition of $Al_4C_3$ particles results in an efficient grain refinement. The damping capacity shows an increasing tendency with an increase in $Al_4C_3$ content. The damping value associated with $Al_4C_3$ particles is linearly dependent on the volume fraction of $Al_4C_3$ particles to the 2/3 power, $f_{2/3}$, which corresponds to the total surface area of the particles.