We have studied the magnetic susceptibility, magnetization and electron paramagnetic resonance (EPR) in the diluted magnetic semiconductor Pb1-x-yMgxYbyTe. The magnetic susceptibility of this system is a superposition of the matrix diamagnetism, the paramagnetic contribution of electrons localized in the ytterbium band, and the Curie-Weiss paramagnetism provided by Yb3+ ions. The concentration of Yb3+ ions monotonically increases with the ytterbium content, while a significant fraction of ytterbium ions remains in a nonmagnetic Yb2+ state. A pronounced hyperfine structure was revealed in the EPR spectra. It was ascribed to the interaction between the electron magnetic moment of an unfilled electron shell of Yb3+ ions and nuclear magnetic moment of the 173Yb isotope. The estimated values of the effective g-factor (g1.997 0.002) and the hyperfine-interaction constant (173A=0,56 cm-1) were found to be almost independent of both alloy composition and temperature.