Abstract The microstructure and mechanical properties of Mg–8.2Gd–3.8Y–1.0Zn–0.4Zr (wt%) alloy sheets produced by combined processes of extrusion, large-strain hot rolling and ageing treatment were investigated. The sheet rolled at 300°C was mainly composed of deformed grains while that rolled at 400°C was fully recrystallized, and the LPSO phase distributed at the grain boundaries in both sheets. The sheet rolled at 300°C and then peak-aged at 200°C exhibits 0.2% proof stress (PS) of 454MPa, ultimate tensile strength (UTS) of 469MPa and elongation to failure of 1.3% at ambient temperature, and 0.2% PS of 413MPa, UTS of 457MPa and elongation to failure of 6.8% at 200°C, respectively. While the sheet rolled at 400°C and peak aged at 200°C had lower 0.2% PS and superior ductility. The improvement of strength is ascribed to the fine β′ phase precipitated within the grains, the LPSO phase and dispersed cuboid Mg–Gd–Y containing phase located at the grain boundaries.