The effect of pre-ageing deformation on the size and distribution of beta-prime precipitates and subsequently on the resulting strength and ductility have been measured in a Mg-3.0at.%Zn-0.5at.%Y alloy. The alloy was extruded and then subjected to a T8 heat treatment comprised of a solution-treatment, cold-work and artificial ageing. Extrusion was used to introduce texture, ensuring that deformation occurred via slip rather than twinning. Samples were subjected to controlled uniaxial deformation and then isothermally aged to peak hardness. Precipitate length, diameter and number density were measured and evaluated in terms of the strength and ductility of the alloy. The nucleation of the beta-prime precipitates in peak-aged condition without pre-ageing deformation (i.e.T6 treatment) was poor, with only 0.5% volume fraction, compared to approximately 3.5% in T6 treated binary Mg-3.0at.%Zn alloy. The microstructure of the Mg-Zn-Y alloy was less refined, with larger diameter precipitates and lower beta-prime number densities compared to a binary Mg-3.0at.%Zn alloy. Deformation to 5% plastic strain increased the volume fraction of beta-prime precipitates to approximately 2.3% and refined the beta-prime precipitate length and diameter. The combination of these effects increased the yield strength after isothermal ageing from 217MPa (0% cold-work) to 287 MPa (5% cold-work). The yield stress increased linearly with reciprocal interparticle spacing on the basal and prismatic planes and the alloy showed similar strengthening against basal slip to Mg-Zn. The elongation increased linearly with particle spacing. The ductility of Mg-Zn-Y alloys was similar to that of Mg-Zn for equivalently spaced particles.