In the present work, microalloying is put forward to improve the microstructure and tensile properties of A356.2-0.15Fe (wt.%) alloy by the co-addition of trace Mn and Mg. A suitable Mn/Fe mass ratio of 0.5 is obtained for alloys with 0.15Fe. The yield strength, ultimate tensile strength, and elongation of the A356.2-0.15Fe alloy with an Mn/Fe ratio of 0.5 and containing 0.42 wt.% Mg is 179 MPa, 286 MPa, and 9.1%, respectively, which is acceptable for automotive wheel hub applications. Optical microscopy (OM), scanning electron microscopy (SEM), transmission electron microscopy (TEM), X-ray diffraction (XRD), and electron-probe microanalyzer (EPMA) methods are used to characterize the microstructure of the alloys. The results indicate that Mn addition promotes the transformation of the acicular β-Al₅FeSi phase to the block-shaped α-Al(Fe, Mn)Si phase. The ratio of length/width of the Fe-rich phase in the alloy is reduced by 78.8% with an Mn/Fe ratio of 0.5 and containing 0.35 wt.% Mg, compared with that of the alloy without Mn addition and containing 0.35 wt.% Mg. The addition of Mg reduces the secondary dendrite arm spacing (SDAS) from 26.1 μm to 20.9 μm. The volume fraction of the precipitated Mg₂Si phase in the alloy containing 0.42 wt.% Mg increases by 60% compared with that in the alloy containing 0.35 wt.% Mg. The morphology transformation of the Fe-rich phase, the reduction of SDAS, and the increase in volume fraction of precipitated Mg₂Si phase comprehensively contribute to the improvement of A356.2-0.15Fe alloy. The microstructure evolution mechanism and the effect of microstructure on tensile properties are analyzed and discussed.