In the present work, the effect of heat treatment at 773 K for 48h on microstructure and mechanical properties of as-cast Mg94Zn2Y4 (at.%) alloy has been investigated. The results showed that block shaped and laths structures 18R long period stacking ordered (LPSO) phase forms directly from the melt. After heat treatment, vast majority of the block shaped and laths structures LPSO phase changed into fine lamellar or needle-like shaped 14H. During heat treatment, a great fraction of LPSO phase was transformed from 18R structure to 14H type. Both 18R and 14H can co-exist within the α-Mg matrix after solution treatment. As a result, with grain sizes of 14-24 μm (the average grain size is about 19 μm), the co-existence of the block shaped and laths structures phase and needle-like shaped phase helps to improve the ultimate tensile strength, yield strength and elongation from 182 MPa, 135 Mpa and 10.2% in as-cast alloy to 245 MPa, 157 MPa and 13.8%, respectively.