Mg-6Al-0.3Mn-xY (x=0, 0.3, 0.6 and 0.9, mass fraction, %) magnesium alloys were prepared by casting and hot rolling process. The influence of yttrium on microstructure and tensile mechanical properties of the AM60 magnesium alloy was investigated. The results reveal that with increasing the yttrium content, Al2Y precipitates form and the grain size is reduced. The ultimate strength, yield strength and elongation at room temperature are 192 MPa, 62 MPa and 12.6%, respectively, for the as-cast Mg-6Al-0.3Mn-0.9Y alloy. All these properties are improved obviously by hot rolling, and the values are up to 303 MPa, 255 MPa and 17.1%, respectively, for the rolled Mg-6Al-0.3Mn-0.9Y alloy. The improvement of mechanical properties is attributed to continuous dynamic recrystallization and the existence of highly thermal stable Al2Y precipitate which impedes the movement of dislocation effectively.