The effect of Cd doping on structure and superconductivity in Mg0.5Cd0.5B2 fabricated by a solid-state reaction at ambient pressure has been investigated. The resulting changes in crystal structure, superconducting transition temperature Tc and critical current density Jc are characterized by X-ray diffraction, dc magnetization, electrical resistance, and magnetic measurements. It reveals that Cd does not occupy the atomic Mg sites in the MgB2 crystal structure, but merely reacts with Mg and forms a MgCd3 phase. It is striking to note that although the nonsuperconducting phase MgCd3 is as high as about 67 vol.% in Mg0.5Cd0.5B2, the Tc of the doped sample drops only by about 1 K. Most important, a surprising improvement of Jc of 5.0 × 10 A/cm (5 K, 0 T) has been achieved in Mg0.5Cd0.5B2. It is suggested that the improvement in Jc in Mg0.5Cd0.5B2 is primarily due to pinning effects induced by MgCd3. Also, it is thought that MgCd3 may fill up gaps among grains in MgB2 and produce better grain linkage, which may be another source of improvement in Jc in Mg0.5Cd0.5B2