High purity forsterite with a mass ratio 60∶40 of MgO over SiO2 was synthesized using magnesite, caustic magnesia and natural silica as starting materials. The synthesized forsterite aggregates were added in magnesia based castable with MgO-SiO2-H2O binding system to replace dead burned magnesia up to 60 mass% at an interval of 15 mass%. Effect of the forsterite addition on properties of MgO based castables was investigated. Microstructure analysis of related specimens was carried out by means of SEM. Special grade bauxite powders were also incorporated to form spinel by reaction with magnesia, accompanying volumetric expansion to compensate high temperature shrinkage. Bulk density of the castable decreases with increased forsterite addition. Properties in terms of cold crushing strength and cold modulus of rupture, hot modulus of rupture at 1 400 ℃ and thermal shock resistance can be improved by adding an appropriate amount of the forsterite aggregate, preferably around 30 mass%.