Mechanical properties and thermal conductivity are the key parameters for Mg alloys used as the structural components for heat dissipation, balancing good mechanical properties and high thermal conductivity is still a long-term challenge. Here, we investigated the influence of Y contents on the microstructure and mechanical properties of the as-cast Mg–4Al–4Zn–(4–x)RE–xY (x: 0, 1, 2, 3, 4 wt%), where RE was the Ce-rich misch metal. Compared with Mg–4Al–4Zn–4RE alloy, the strength and ductility were significantly enhanced due to the well-optimized microstructure by the suitable substitution of Y for Ce-rich RE. Especially, the ultimate tensile strength and elongation were significantly improved from 201 MPa to 244 MPa and 8.0% to 16.8%, respectively, when the Y content was increased from 0 to 3.0 wt%. Meanwhile, the thermal conductivity still kept a high level within the range of 84.2–89.6 W(m·K)−1. The significantly improved elongation was mainly attributed to the reduction and refinement of coarse lamellar Al11RE3 intermetallic phases with increasing Y contents. The as-cast Mg–4Al–4Zn–1RE–3Y alloy exhibited high performance with a combination of high tensile properties and good thermal conductivity.