In this study, a new magnesium (Mg) alloy containing 0.4% Ce was developed using the technique of disintegrated melt deposition followed by hot extrusion. The tensile and compressive properties of the developed Mg–0.4Ce alloy were investigated before and after heat treatment with an intention of understanding the influence of cerium on the deformation and corrosion of magnesium. Interestingly, cerium addition has enhanced the strength (by 182% and 118%) as well as the elongation to failure of Mg (by 93% and 8%) under both tensile and compressive loadings, respectively. After heat treatment, under compression, the Mg–0.4Ce(S) alloy exhibited extensive plastic deformation which was 80% higher than that of the as-extruded condition. Considering the tensile and compressive flow curves, the as-extruded Mg–0.4Ce and the heat treated Mg–0.4Ce(S) alloys exhibited variation in the nature and shape of the curves which indicates a disparity in the tensile and compressive deformation behavior. Hence, these tensile and compressive deformation mechanisms were studied in detail for both as-extruded as well as heat treated alloys with the aid of microstructural characterization techniques (scanning electron microscope (SEM), transmission electron microscope (TEM), selective area diffraction (SAD), and X-ray diffraction (XRD) analysis. Furthermore, results of immersion tests of both as-extruded and heat treated alloys revealed an improved corrosion resistance (by ∼3 times in terms of % weight loss) in heat treated state vis-a-vis the as-extruded state.