The effects of Ce-rich Rare Earth (RE) on modification of eutectic silicon, formation of RE compound, and mechanical properties of Al-20Si-2Cu-1Ni high silicon aluminum alloy have been studied by use of optical microscope (OM), scanning electron microscopy (SEM), and energy dispersive spectrometry (EDS). The mechanism was also discussed. The results show that, RE can modify eutectic silicon effectively which show better modification with increasing amounts of RE. While it also cause formation of needle-like RE compounds which increase with increasing amounts of RE. The mechanism of eutectic silicon modification is that the growth of eutectic silicon is hindered by the RE elements enriched at solidification front. But the excess RE will lead to form acicular Al2Si2RE compound containing a few solution of Cu and Ni elements which can offset part of the improvement of mechanical properties contributed by eutectic silicon modification. As a result, the mechanical performances of this alloy decrease with more acicular Al2Si2RE compound formation. With addition of 0.6% RE to the melt, the tensile strength and elongation of casted high silicon aluminum alloy reach maximum values which improve by 33% and 230% respectively, compared to the case without RE.