Abstract The metastable β1 phase is a key strengthening precipitate phase in a range of Mg–RE (RE: rare-earth elements) based alloys and its morphology and spatial distribution are critical to the mechanical properties of these alloys. Being fully coherent with the matrix and having both dilatational and shear components in the transformation strain, the β1 precipitates interact strongly with stress-carrying lattice defects such as dislocations, offering ample opportunities to utilize thermomechanical processes to tailor precipitate microstructures. In this study, a phase-field model is developed to examine heterogeneous nucleation of β1 precipitates on various a-type dislocations (screw, edge and mixed) in an Mg–0.5at.% Nd alloy. It is found that the β1 precipitates form as ultra-thin long plates with abnormally large aspect ratios under the influence of the stress fields of screw dislocations that lie in the precipitate habit planes, but into a zigzag configuration comprising two β1 orientation variants of much smaller aspect ratios under the influence of edge dislocations. At mixed dislocations, the β1 precipitates form into a variety of arrays, often comprising particles of the same orientation variant. These simulation results, which agree well with experimental observations, are analysed by elastic interactions between the dislocations and nucleating precipitates.