Precipitate microstructures in Mg-2.0Gd-1.2Y-0.75Zn-0.2Zr alloy were investigated and the characteristic and mechanism of microstructure evolution in the alloy were discussed. Specific long-period 14H ordered stacking structure was formed at grain boundary of Mg matrix crystals by solution heat treatment at 773K and metastable β’ phase was formed during subsequent aging treatment at 498K in the Zn-added Mg-Gd-Y alloys. These structure and phase exist simultaneously at the peak-aged condition in the microstructure. Precipitate free zone (PFZ) of β’ phase does not exist at an interface between a 14H structure and Mg matrix inside the grain, however, PFZ exist near the edge of 14H structure at grain boundary. These results strongly suggest that high diffusion rate of solute atoms at grain boundary promotes the nucleation and growth of 14H structure.