The invention discloses a Y-doped Mg alloy. The Y-doped Mg alloy is composed of Mg, Zn, Zr and Y and comprises, by mass, 4.9-5.5% of Zn, 0.16-0.19% of Zr, 2.9-3.2% of Y, and the balance Mg and inevitable impurities. A preparation method of the Y-doped Mg alloy comprises the steps of (1) preparation of alloy powder, specifically, adding ethyl alcohol to Mg-Zn-Zr powder and Y powder, adding zinc stearate, conducting vacuum pumping, and conducting ball milling to obtain the alloy powder; (2) sintering, specifically, feeding the alloy powder into a vacuum hot pressing sintering furnace, and conducting vacuum pumping, heating sintering and cooling to obtain an alloy billet; and (3) hot extrusion, specifically, conducting heat preservation, feeding the alloy billet into an extrusion die for extrusion and then obtaining the Y-doped Mg alloy. According to the Y-doped Mg alloy and the preparation method thereof, the rare earth element Y is subjected to solid solution to go into a Mg base body to promote formation of an alloy double-peak crystal structure, grain refinement, generation of high-melting-point hard phases and the like. On the premise of ensuring the strength, the toughness and plastic formability of the Mg alloy are improved, and a certain reference basis is provided for actual application of the Y-doped Mg alloy.