This study investigates the microstructure evolution and mechanical behavior of a laser-welded dissimilar joint between wrought AZ80 and cast AM60 magnesium alloys. Microstructure analysis revealed a distinct fusion zone (FZ) spanning 1.5 mm and a heat-affected zone (HAZ) measuring 550 µm in width adjacent to the AZ80 alloy. Meanwhile, the AM60 side showed no fusion-related structural changes. The FZ microstructure had a characteristic dendritic solidification pattern, with an average grain size around 20 µm. The welded joint exhibited mechanical performance comparable to that of the base materials, with a yield strength of 137 MPa, an ultimate tensile strength of 250 MPa, and an elongation of 5.9%. These properties resulted from precipitated phases within the FZ, strengthening the joint and the coarse-grained structure’s significant work-hardening ability. Digital image correlation (DIC) during tensile testing indicated that strain concentrated within the FZ due to its coarse microstructure. As deformation continued, the AM60 base material experienced plastic deformation, sharing the main strain burden with the FZ. In later stages, microcracks formed specifically at the FZ-AM60 interface. These microcracks coalesced, accelerating crack propagation and resulting in a main crack that caused the joint to fracture. These findings offer valuable insights into controlling failure mechanisms in dissimilar magnesium alloy welds.