The escalating demand for high specific strength and lightweight metallic materials in the automotive, aerospace, and electronics industries has greatly promoted the research and development of advanced cast magnesium alloys. Among commercial magnesium alloys, Mg–Zn alloys offer distinct advantages over Mg–Al series alloys due to their pronounced age-hardening characteristics, which enable strength enhancement through solution and aging treatments. However, the overall mechanical properties of binary Mg–Zn alloys are not ideal. Squeeze casting, a process that integrates the broad applicability of casting with the high quality of forging, offers several advantages, such as environmental friendliness, efficiency, short processing times, and superior performance. This technique is particularly suitable for manufacturing complex structural components and plays a crucial role in promoting lightweighting, energy conservation, and emission reduction in the automotive and defense sectors. The synergistic application of rare earth elements and squeeze casting can significantly improve the mechanical performance of cast magnesium alloys through various strengthening mechanisms, including grain refinement and second-phase regulation. Consequently, adding Ca (a non-rare earth element) and rare earth elements such as Y, Nd, and Dy to Mg–Zn alloys, followed by squeeze casting, represents an effective technical approach to enhance both the strength and ductility of these alloys. This strategy refines crystalline grains and eutectic phases by increasing the supersaturated solid solubility of the matrix, thereby optimizing the second phases. Despite these advantages, few reports have examined the regulation of the microstructures of Mg–Zn series alloys via squeeze casting to improve their strength and ductility, thus underscoring the urgent need for systematic research. To address this gap and meet engineering requirements in critical sectors, a novel Mg–2Zn–0.8Y–0.4Nd–0.5Dy–0.05Ca–0.3Zr alloy was prepared using squeeze casting combined with aging treatment. This alloy exhibits excellent strength and ductility, achieving a yield strength, tensile strength, and elongation of 144 MPa, 298 MPa, and 15.7%, respectively. The effects of squeeze casting pressure on the microstructures and mechanical properties of this Mg–Zn–Ca–Zr–RE alloy were systematically investigated using various characterization methods, including scanning electron microscopy, electron backscattered diffraction, and transmission electron microscopy, coupled with hardness and tensile tests. Results reveal that squeeze casting significantly refines grains and W phases, with the W phases transforming from a reticular to a lamellar morphology. This microstructural optimization leads to superior mechanical properties in squeeze-cast alloys. Compared to gravity–cast alloys, squeeze-cast alloys exhibit smaller and more densely distributed Zn–Zr phases within the grains after solution treatment. Furthermore, the nano-η′ phase formed during aging significantly enhances the yield strength. In summary, the synergistic effects of precipitation strengthening and grain boundary strengthening contribute to the excellent combination of strength and ductility observed in the new alloy.