The microstructure, mechanical and electrochemical properties of plasma electrolytic coatings (PEO) coatings on Mg-4.3 wt%Zn-1.0 wt%Y and Mg-1.0 wt%Zn-2.0 wt%Y alloys prepared by gas atomization, followed by compaction at 320 for 10 min under the pressure of 700 MPa and sintering at 380 and 420 respectively for 24 h, were investigated, which was compared with the cast Mg-1.0 wt%Zn alloy. All coatings consisting of MgO and $Mg_2SiO_4$ oxides showed porous and coarse surface features with some volcano top-like pores distributed disorderly and cracks between pores. In particular, the surface of coatings on Mg-1.0 wt%Zn-2.0 wt%Y alloy showed smaller area of pores and cracks compared to the Mg-4.3 wt%Zn-1.0 wt%Y and Mg-1.0 wt%Zn alloys. The cross section micro-hardness of coatings on the gas atomized Mg-Zn-Y alloys was higher than that on the cast Mg-1.0 wt%Zn alloy. Additionally, the coated Mg-1.0 wt%Zn-2.0 wt%Y alloy exhibited the best corrosion resistance in 3.5%NaCl solution. It could be concluded that the addition of Y has a beneficial effect on the formation of protective and hard coatings on Mg alloys by plasma electrolytic oxidation treatment.