Mg-4.9Zn-0.9Y-0.7Zr alloy and Mg-4.9Zn-0.7Zr used as compared alloy were prepared by ingot metallurgy method. The influence of Y addition on microstructure and properties was studied. Phase analysis, microstructure and morphology of second phases were investigated by XRD, OM and SEM. The component and morphology of the second phases was analyzed by EDAX and TEM. The results showed that, Y was an effective element strengthening Mg-Zn-Zr alloy, a large number of Mg3Zn6Y phase was formed due to the addition of Y. During the process of hot rolling, Mg3Zn6Y phase was pulverized into large amount of dispersion particles, which pinned dislocation effectively, so ultimate strength and yield strength at room temperature were improved, as well as good plasticity was remained.