Fine-grain magnesium alloy sheets possess high strength and excellent ductility，and fine-grain AZ61 magnesium alloy sheets of 2.0 mm in thickness were welded with CO2 laser beam with filler metal and without filler metal. The weldability of fine-grain magnesium alloy sheets and the effect of the rare-earth element Ce in filler on fusion zone microstructure and mechanical properties were investigated. The results indicated that the rare-earth element Ce could refine microstructure, so that the grain size of joint without filler was much larger than that with filler and the former was about 15 μm and the latter was about 5 μm. Also, columnar dendritic grain range was restrained and equiaxed dendritic grain range was expanded resulting from the rare-earth element Ce. Additionally, there was little difference between heat affected zone (HAZ) and base metal and the extent of liquation in partially melted zone (PMZ) was low, and the range of HAZ and PMZ was narrow, which showed that the weldability of fine-grain AZ61 alloy sheets was good . The ultimate tensile strength and elongation of the weld with filler metal are 6% and 12% higher than the weld without filler metal.