Microstructures and mechanical properties of Mg-5Y-0.6Zr-xNd (x=0, 0.5 and 1 wt%) alloys under various heat treatment conditions were investigated by optical microstructure (OM), scanning electron microscope (SEM), X-ray diffraction (XRD), electron backscatter diffraction (EBSD) and tensile tests. The results show that with the increase Nd of content, the amount of second phases Mg24Y5 and Mg14Nd2Y (beta) increases in the matrix. Minor Nd addition can reduce the stacking fault energy of alpha-Mg and promote the dynamic recrystallization during hot-rolled process. As the Nd content increases, the volume fraction of static recrystallization is promoted obviously. The average grain size of Mg-5Y-0.6Zr-0Nd alloy after annealing treatment can be refined to 3.73 mu m. Tensile strength of as-rolled alloys increases with the addition of Nd, while the elongation decreases. As-rolled alloy sheet with 1.01 wt% Nd exhibits remarkable mechanical properties, in which the values of ultimate tensile strength, yield strength and elongation are 336 MPa, 278 MPa and 16.3%, respectively. Based on the microstructure observation, the changes of mechanical properties were discussed.