Microstructures and mechanical properties of a Mg−8Gd−3Yb−1.2Zn−0.5Zr (wt%) alloy have been investigated. The dominant intermetallic phases in the as-cast sample are Mg₅RE (RE = Gd,Yb) phase, 14H-type long-period stacking ordered (LPSO) phase, and Mg₂Zn₂RE (W) phase and ordered Mg₁₂RE phase. Furthermore, the ordered Mg₁₂RE phase generally coexists with the W phase following an orientation relationship as [01¯1]_w//[2¯30]_Mg12RE, and (1¯11)_w//(001)_Mg12RE. After extrusion, the microstructure is consisted of un-recrystallized regions along with a small part of fine dynamically recrystallized (DRXed) regions. Simultaneously, the coarse Mg₅RE, W and Mg₁₂RE particles were disintegrated and mainly distribute at extrusion stringers while the fine LPSO plates mainly distribute in un-recrystallized regions. Moreover, amounts of nanoscale Mg₅RE particles were dynamically precipitated in DXRed regions. Then, the as-extruded Mg−8Gd−3Yb−1.2Zn−0.5Zr alloy exhibits clearly higher strength than the classic rare-earth-containing magnesium alloys with comparative or even much higher rare earth content at both room temperature and high temperatures. The dominant strengthening mechanism was finally revealed as precipitation/dispersion strengthening.