In the present study, the effect of yttrium addition on the microstructure and mechanical property of rapidly solidified AZ91 alloy by melt spinning process is estimated. As yttrium was added, the microstructure of RS ribbons and extrudates became finer than those of AZ91, and RE related phases (Al₂RE) were formed. In the case of the addition of 3wt%Y, the microstructure of extrude showed the finest grain size. At room temperature, the AZ91 ＋ 3wt%Y alloy showed the highest tensile strength, 352㎫ due to precipitation of β(Mg_(17)Al_(12)) phase and Al₂RE phase. At the elevated temperature, the mechanical property of AZ91 ＋ 3wt%Y alloy was higher than those of other Mg alloys. The reasons were that Al₂Y compound was thermally stable and suppressed the grain growth. In contrast with Al₂Y compounds, β phase was thermally unstable and could not suppress the grain growth at the elevated temperature. Therefore, Al₂Y phase contributed to improve the thermal stability of RS AZ91 alloy.