The microstructure and mechanical properties of Mg-2Zn-1Mn-xY (x=0, 1, 3, 5, 7, wt%) alloy were studied by optical microscope (OM), X-ray diffractometer (XRD), X-ray fluorescence spectrometer (XRF), electron probe microanalyzer (EPMA), scanning electron microscope (SEM), electron backscatter diffractometer (EBSD), transmission electron microscope (TEM), and uniaxial tensile tests. Results show that the secondary phases of as-cast alloys are changed from Mg₇Zn₃ to Mg₃Zn₃Y₂ and finally transformed to Mg₁₂ZnY with the addition of Y element. Although Y addition hinders the dynamic recrystallization process and therefore refines the grains, the excess Y addition cannot further refine the grains. Meanwhile, the ductility of as-extruded Mg-2Zn-1Mn alloy is increased and then decreased with the addition of Y element, which may be attributed to the synergistic effect of texture orientation and grain coarsening. Besides, the strength enhancement is mainly attributed to grain refinement strengthening and secondary phase strengthening. The Mg-2Zn-1Mn-7Y alloy has the optimal mechanical properties: the ultimate tensile strength is 357 MPa, yield strength is 262 MPa, and elongation is 14%.