The microstructures and mechanical properties of Mg-8.5Gd-4.5Y-0.3Zr (wt%) alloys with and without Zn addition were investigated in this study, and the strengthening mechanisms of these two alloys were also discussed. The results show that the as-extruded alloys possesses a fine and uniform microstructure, while the as-extruded alloy with Zn addition has finer grains due to the dislocation motion inhibited by the long-period stacking ordered (LPSO) phase. Dynamic precipitation occurs during the extrusion process and unevenly distributes in both alloys, which is beneficial for the grain refinement. The yield strength and elongation of the peak-aged alloy with Zn addition are about 56 MPa and two times higher than that of the alloy without Zn addition; this higher elongation and yield strength can be mainly ascribed to the LPSO and γ phases strengthening.