Aiming to balance the utilization of rare earth (RE) resources and develop Y-Fe-B based permanent magnets, Ho is employed as strategic substitution for enhancing the magnetic properties and thermal stability of nanocrystalline Y-Fe-B alloys. Ho substituting Y can enhance the coercivity of Y-Fe-B alloys while maintaining their excellent thermal stability. 30 at.% Ho substitution leads to an abnormal increase of remanence J
r and (Y0.7Ho0.3)2Fe14B alloy exhibits good magnetic properties with remanence J
r = 0.73 T, intrinsic coercivity H
cj = 303 kA m−1, and maximum energy product (BH)max = 66 kJ m−3. High thermal stability with temperature coefficient of remanence α = −0.124%/K and temperature coefficient of coercivity β = −0.245%/K were obtained between 300–400 K. The results for RE-rich (Y1−xHox)2.5Fe14B alloys also show that the magnetic properties change with Ho content are similar to those of (Y1−xHox)2Fe14B alloys, but the coercivity is higher. In addition, nanocrystalline (Y0.5Ho0.5)2.5Fe14B magnets were prepared by hot-pressing and hot deformation process. Due to the lack of low melting point RE-rich phase, this alloy is difficult to be densified and deformed. The formation of high temperature RE2O3 and RE6Fe23 phases and the lack of continuously distributed RE-rich grain boundary phase are responsible for the poor texture of hot deformed magnet. The hot deformed magnet has the magnetic properties of J
r = 0.50 T, H
cj = 739 kA m−1, and (BH)max = 40 kJ m−3 together with high thermal stability. The micro-analysis demonstrated the chemical segregation of Y and Ho elements. Higher proportion of Ho than Y existed in main phase and grain boundary phase indicate excess Y were precipitated as Y-rich oxides.