Mg-4.3Zn-0.7Y (at%) alloy powders were prepared using an industrial scale gas atomizer, followed by warm extrusion. The powders were almost spherical in shape. The microstructure of atomized powders and those extruded bars was examined using Scanning Electron Microscopy (SEM), Energy Dispersive X-ray Spectroscope (EDS) and X-ray Diffractometer (XRD). The grain size of the powders was coarsen as the initial powder size increased. After the extrusion, the grain size became fine due to the severe plastic deformation during the extrusion with the ratio of 10:1. Both the ultimate strength and elongation were enhanced with the decrease of initial particle size.