Hot extrusion was performed on as-cast Mg-3Zn-1Y-1Mn alloy to further improve the mechanical properties and investigate its microstructure evolution and deformation mechanism at different thermal deformation temperatures. The experimental results suggested that the alloy at the extrusion temperature of 330 °C had the optimal mechanical properties, and the tensile strength and elongation of the alloy were 270 MPa and 16.8%, respectively. The strength improvement of the as-extruded alloy primarily arose from three aspects, including fine-grain strengthening due to dynamic re-crystallization (DRX), dislocation strengthening not offset by DRX, and second phase strengthening. Continuous dynamic re-crystallization (CDRX) and dynamic recovery (DRV) occurred simultaneously at the extrusion temperature of 300 °C. The discontinuous dynamic re-crystallization (DDRX) occurred at the extrusion temperature of 330 and 360 °C. However, the contribution of {0001} basal plane slip, prismatic type I and prismatic type II slips to plastic deformation was significantly affected by the extrusion temperature. The prismatic type II slip was found to be the most difficult one to initiate among the three slip systems.