The Effect of the solidification conditions and subsequent extrusion of a Mg-3.0Zn-0.5Y (at. %) alloy containing quasicrystalline icosahedral (i-) phase was studied. Solidification was carried out by three methods using a chill casting mold, a conventional steel mold and a water-cooled mold. Subsequently, castings were extruded in the temperature range of 235-270 • C at an extrusion ratio of 25:1. The solidification molds showed different characteristics. The water-cooled mold was most effective in cooling through the walls, but least effective at the center of the mold. The conventional cast mold was the most effective in cooling at the mold center. All the castings had an interdendritic eutectic structure of the i-phase , and a supersaturation of the matrix in zinc. As a result, all the extrusions had similar grain size close to 1 µm and very fine nano-size precipitation. Yield strengths in tension were in the range of 376 and 404 MPa, and from 300 to 330 MPa in compression. All elongations to fracture were about 13%. It is concluded that supersaturation of the matrix during solidification is the main factor, resulting in the dynamic precipitation of very fine precipitates and fine grain size during extrusion.