Tensile and high cycle fatigue (HCF) properties of the hot-rolled Mg-12Gd-3Y (wt.%) magnesium alloyhave been investigated. The magnesium alloy exhibits a fatigue strength of about 150 MPa, which ismuch higher than that of the commercial Mg-8Al-Zn alloy AZ80. Aging heat-treatment (T5) improvedthe fatigue life of the Mg-12Gd-3Y alloy. Fatigue cracks nucleated at the intense slip bands in theas-rolled alloy. After T5 treatment, however, the fatigue crack nucleation site shifted to the phase boundariesbetween MgGdY particles and Mg matrix. T5 heat-treatment retarded the crack initiation and thusimproved the fatigue life of the Mg-12Gd-3Y alloy.