MgZn4.3Y0.7 alloy powders were prepared using an industrial scale gas atomizer, followed by warm extrusion. The powders were almost spherical in shape. The microstructure of powders as atomized and bars as extruded was examined as a function of initial powder size distribution using Scanning Electron Microscope (SEM), Energy Dispersive X-ray Spectroscope (EDS) and X-ray Diffractometer (XRD). The grain sizes were decreased with extruding as well as decreasing the initial powder sizes. Both the ultimate strength and elongation were enhanced as the initial powder sizes were decreased.