In this paper, a three-dimensional (3D) microstructure-based finite element modeling method (i.e., extrinsic modeling method) is developed, which can be used in examining the effects of porosity on the ductility/fracture of Mg castings. For this purpose, AM60 Mg tensile samples were generated under high-pressure die-casting in a specially-designed mold. Before the tensile test, the samples were CT-scanned to obtain the pore distributions within the samples. 3D microstructure-based finite element models were then developed based on the obtained actual pore distributions of the gauge area. The input properties for the matrix material were determined by fitting the simulation result to the experimental result of a selected sample, and then used for all the other samples’ simulation. The results show that the ductility and fracture locations predicted from simulations agree well with the experimental results. This indicates that the developed 3D extrinsic modeling method may be used to examine the influence of various aspects of pore sizes/distributions as well as intrinsic properties (i.e., matrix properties) on the ductility/fracture of Mg castings.