Zirconium alloys are widely used in the field of nuclear, chemical, aerospace, and medical industries due to their extremely low thermal neutron absorption, excellent corrosion resistance, radiation damage resistance, good mechanical properties, and biocompatibility, etc. Zr-based alloys prepared by powder metallurgy have the advantages of less macroscopic defects and a low cost. However, Zr-based alloys usually absorb oxygen with a high content during the preparation of the powder metallurgy, leading to poor tensile plasticity, which was the main reason for the limitation of the application of Zr alloys. In this study, the tensile plasticity of Zr-based alloys prepared by powder metallurgy was improved by doping yttrium hydrides due to the absorption of the yttrium to the oxygen in the alloy matrix. The effects of Y doped content on the microstructure and mechanical properties of Zr-30Nb alloys were carefully investigated. The results showed that the O content in the matrix was significantly decreased with the increase in doping Y, in which Y2O3 formed in the matrix. Because O is a stabilizing element of α phase, the decrease of O content in the alloy matrix leads to the decrease of α phase and the increase of β phase, which is beneficial to the improvement of tensile plasticity. Taking the Zr-30Nb alloy with the addition of 2.4 wt.% Y as an example, the tensile plasticity was increased by 4 times. The critical fracture strain was increased from 0.7 % to 3.5 % with 2.4 wt.% Y doping.