The　microstructure　evolution　of　as-cast,　as-extruded　and　peak-aged　Mg-12Gd-2Er-1Zn-0.6Zr　alloys　were　investigated　by　Optical　Microscope　(OM),　X-ray　Diffraction　(XRD),　Scanning　Electron　Microscope　(SEM)　and　Transmission　Electron　Microscope　(TEM).　The　mechanical　performance　was　also　tested　by　tensile　test　at　room　temperature　in　the　present　study.　The　results　indicated　that　the　lamellar　14H-LPSO　structure　formed　during　the　solid　solution　process　at　793　K　for　24　h,　and　also　existed　after　hot　extrusion　process.　The　dynamic　recrystallization　(DRX)　occurred　during　hot　extrusion.　The　DRXed　fine　grain　size　was　~5　μm.　Meanwhile,　some　un-DRXed　grains　contained　LPSO　structure　had　a　roughly　orientation　along　the　extrusion　direction.　The　tensile　test　result　showed　that　the　as-extruded　alloy　had　a　better　elongation　of　14%　due　to　fine　DRXed　grain　and　fiber-like　un-DRXed　with　LPSO　structure　attributed　to　the　high　elongation.　Because　of　the　precipitation　of　the　β＇-phase,　the　ultimate　tensile　strength　(UTS)　and　yield　tensile　strength　(YTS)　increased　up　to　415　MPa　(UTS)　and　374　MPa　(YTS),　respectively.　©　2015　National　Engineering　Research　Center　for　Magnesium　Alloys　of　China,　Chongqing　University.