The microstructure evolution and mechanical properties of Mg-15Gd-3Y alloy were investigated in the as-cast and heat treated conditions. The microstructure evolution from as-cast to cast-T4 states involved α-Mg solid solution+Mg5(Gd, Y) phase→α-Mg supersaturated solid solution+rare earths compound Mg3(Gd1.26,Y0.74)→α-Mg supersaturated solid solution+rare earths compound Mg3(Gd0745,Y1.255).It showed that 480 ℃/4 h was the optimal solution treatment parameter. If the solution temperature was high or the holding time was long,such as 520 ℃/16 h, an overheating phenomenon would be induced, which had a detrimental effect on the mechanical properties. When ageing at 225 and 200 ℃, the alloy would exhibit a significant age-hardening response and great long-time-age-hardening potential, respectively.The best mechanical properties were obtained at the parameters of 480 ℃/4 h+225 ℃/16 h, with the UTS of 257.0 MPa and elongation of 3.8%.