The microstructure and mechanical properties of Mg94Y4Zn1Ni1 alloy in as-cast, as-annealed, as-extruded and aged stages were inverstigated by OM, SEM, TEM and electronic universal testing machine. The results show that the as-cast alloy is composed of α-Mg matrix, 18R LPSO structure and Mg24(Y,Zn,Ni)5 phase. During hot extrusion, the 18R phases become stripy shape and are aligned in lines along extrusion direction. The ultimate tensile strength of as-extruded alloy reaches 417 MPa. After aging, a large number of coherent β'' phases are precipitated in α-Mg matrix, and because of which, the strength of the alloy is enhanced further. The T5-treated and T6 treated alloys exhibit ultimate tensile strength of 434 MPa and 432 MPa, respectively.