Lightweight Mg alloys are being widely adopted in electronic devices and automotive parts. However, the mechanical properties of Mg alloys are inferior to those of Al alloys, and their range of applications is limited. Recently, Mg-Zn-Y alloys have been found to exhibit superior mechanical properties to other Mg alloys. However, for use as industrial materials, it is necessary to improve their ductility while retaining their strength. We studied the mechanical properties of extruded Mg96Zn2Y2 alloy with long-period stacking order (LPSO) phases, in addition to the thermal stability of its structure during annealing. The elongation of the alloy improved from 5 % to 10 % with slightly loss of strength up to an annealing temperature of 623 K. Even at this temperature, it was possible to maintain good mechanical properties and a thermally stable microstructure.