The rising industrial demand for ultra-lightweight materials with exceptional strength and toughness has intensified interest in dual-phase Mg-Li alloys due to their low density and high specific strength. While much of the research on Mg-Li alloys has concentrated on conventional strengthening methods, such as grain refinement and solid-solution strengthening, overcoming the challenge of plastic deformation compatibility between the α- and β-phases remains unresolved. This study focuses on Mg-8Li binary alloy, systematically investigating the impact of rolling deformation temperature and strain on the phase structures. A detailed analysis of fracture behavior reveals a novel brittle–tough composite fracture control strategy that enhances both strength and toughness simultaneously. This work advances the understanding of phase structure control and its role in strengthening and toughening mechanisms, offering critical insights for the development of next-generation dual-phase magnesium alloys.