Surface mechanical attrition treatment (SMAT) was conducted on a Mg-Gd-Y alloy to obtain a gradient structure. Vickers micro-hardness tests and transmission electron microscopy were employed to study the age hardening behavior and the mechanisms. The gradient structure in the SMATed alloy can be classified into three layers: the severely deformed layer, the moderately deformed layer and the undeformed layer. The different layers exhibited distinct age hardening behaviors when aged at 225°C. The aging times for peak hardness increased in the order of the severely deformed layer, the moderately deformed layer and the undeformed layer; however, the hardness increments at the peak aging times decreased in the same order. This was attributed to the different distributions of the precipitates and their variable interactions with dislocations in the different layers. The severely deformed layer exhibited the shortest aging time and the highest value for peak hardness, which indicated that the surface nanocrystallization had remarkable effect on promoting age hardening for the Mg-Gd-Y alloy.