The　formation　mechanism　of　beta(1)　phase　has　been　a　controversy　in　age-hardenable　magnesium-rare　earth　alloys　for　over　two　decades.　Its　nucleation　and　growth　were　not　clearly　illustrated　so　far　due　to　the　lack　of　direct　experimental　evidence.　In　the　present　work,　we　unveil　the　formation　mechanism　of　beta(1)　phase　based　on　the　in-situ　and　ex-situ　observations　using　high-angle　annular　dark-field　scanning　transmission　electron　microscopy.　The　direct　evidences　reveal　that　beta(1)　phase　is　transformed　from　beta(F)＇　phase　by　short-range　solute　diffusion,　atomic　shuffle　coupled　with　shear　mechanism.　The　beta(F)＇　precipitate　firstly　converts　to　intermediate　precipitate　via　short-range　solute　diffusion　in　its　zig-zag　array　on　(10　(1)　over　bar0)(alpha)　plane,　and　then　transforms　into　beta(1)　precipitate　via　atomic　shuffle　in　the　modified　beta(F)＇　lattice　and　shear　of　(10　(1)　over　bar0)(alpha)　zig-zag　array　by　similar　to　5　degrees　with　respect　to　[11　(2)　over　bar0](alpha)　orientation.　These　findings　shed　light　on　the　formation　mechanism　of　beta(1)　phase,　and　hopefully　address　the　long-standing　controversy.