Although icosahedral quasicrystal phase (denoted as I-phase) has been verified as an outstanding reinforcing phase, the mechanical properties of quasicrystal-reinforced Mg-Zn-Y alloys fabricated by traditional casting processes are still unsatisfactory due to the serious segregation of intermetallic compounds. In this study, the microstructure and mechanical properties of Mg-12Zn-2Y alloy fabricated by different casting processes, including permanent mold casting, squeeze casting and rheo-squeeze casting with ultrasonic vibration, were systematically investigated and compared. The results show that massive, large-sized I-phase and Mg7Zn3 phase gather together in the permanent mold cast sample, while the squeeze casting process leads to the transformation of I-phase into fine lamellar morphology and the amount of Mg7Zn3 decreases. As to the rheo-squeeze casting process, when the ultrasonic vibration is exerted with power from 800 W to 1,600 W, the α-Mg grains are refined and spheroidized to a large extent, and the lamellar spacing of the eutectic structure is significantly reduced, accompanied by some tiny granular I-phase scattering in the α-Mg matrix. However, when the ultrasonic power continuously increases to 2,400 W, the eutectic structure becomes coarse. The best mechanical properties of the rheo-squeeze cast alloy are obtained when the ultrasonic power is 1,600 W. The microhardness, yield strength, ultimate tensile strength and elongation are 79.9 HV, 140 MPa, 236 MPa, and 3.25%, which are 44.1%, 26.1%, 25.5%, 132.1% respectively higher than the corresponding values of the squeeze casting sample, and are 47.6%, 44.3%, 69.8%, and 253.3% respectively higher than the corresponding values of the permanent mold casting sample.