Microstructures developed by warm extrusion for Mg97Zn1Y2 alloy including long-period stacking order (LPSO) phase have been investigated using SEM and TEM. The extruded magnesium alloy with LPSO phase exhibits high strength and sufficient ductility. Such superior mechanical properties appear by warm extrusion around the temperature of 623K. The microstructure of the extruded alloy consists of matrix of fine-grained hcp phase and elongated grains with fine-lamellae including LPSO phase. The grain size of hcp matrix was about 1μm, indicating that remarkable grain refinement was occurred by extrusion since the grain size of as-cast alloy was about 500μm. Special attention has been paid on the enrichment of solutes at stacking faults and grain boundaries in the fine-grained matrix, which would contribute not only to the strengthening but also to the stability of fine-grained structure because of its role of an inhibiter against grain coarsening.