Novel Zn–22Al–5Ag–0.2Sc (wt-%) alloy was fabricated by adding Ag and Sc elements in the Zn–22Al alloy. AgZn3 formed after adding Ag element has a remarkable refining effect on both α and η phases, and Al3Sc formed after adding Sc element can further refine the α phase. Due to the increased densities of grain boundaries and phase interfaces, the Zn–22Al–5Ag–0.2Sc alloy has significantly improved damping at relatively high temperatures. At low temperatures, however, due to the decreased mobility of interfaces, the damping decreases. Solution and quenching treatments can further dramatically improve the damping due to the formation of the eutectoid structure composed of sub-micron α and η phases. Detailed mechanisms have been discussed.