As-cast ingots of Mg-8Li-4Zn-xY magnesium alloy were prepared by lithium flux protection in an electric-resistance furnace, and 1 mm thick sheets were prepared by forward extrusion. Microstructures and mechanical properties of the alloy were investigated with OM, SEM equipped with an energy-dispersive X-ray spectroscopy (EDS), XRD and the HV-120 hardness Vickers. The results show that the matrix of as-cast Mg-8Li-4Zn-xY alloy consists of α-Mg (hexagonal close-packed) and β-Li (body-centered cubic) phase. The precipitation strengthening phase particles and compounds are Mg2Zn11, Mg72.05Zn27.95, MgZn, Mg2Y, MgY and unknown phase. The matrixes of Mg-8Li-4Zn-xY magnesium alloy ingots are refined and the amount of the precipitation strengthening phase are enhanced along with the yttrium content increasing, but there is no appreciable changing of the matrix size, appearance and dispersion precipitation phases in β-Li phase. On the contrary, the α-Mg phases wrapped by β-Li phase are elongated and refined during the extrusion process, and paralleled to the extrusion direction as stripped. The β-Li phases could coordinate plastic deformation and synchronize dynamic recrystallization, and the strengthening phases are of uniform distribution on the crystal boundary. The ingots and 1 mm thick sheets of Mg-8Li-4Zn-xY alloys are strengthened and the hardnesses are also enhanced in different extent along with the yttrium content increasing.