In this investigation, the effects of different annealing temperatures (180, 200, 220, 240, 260, and 280 °C) on the microstructure evolution and properties of an extruded Mg–2.0Zn–1.0Y–0.5Zr (wt%) magnesium alloys were determined. Optical microscopy (OM), scanning electron microscopy (SEM), immersion corrosion, electrochemical corrosion experiments, and tensile testing were performed. Research has found that combining hot extrusion with subsequent low-temperature annealing significantly improves the strength, plasticity, and corrosion resistance of alloys due to grain refinement and a reduced dislocation density. The alloy was completely recrystallized at an annealing temperature of 240 °C for 4 h after solid solution extrusion, and the grains were fine and uniform, demonstrating the best comprehensive properties. Its corrosion rate, ultimate tensile strength, yield strength, and elongation were 0.454 ± 0.023 mm/y, 346.7 ± 8.9 MPa, 292.4 ± 6.9 MPa, and 19.0 ± 0.4%, respectively. The corrosion mechanism of the specimens under extruded and annealed conditions was analyzed. After annealing at 240 °C for 4 h, the dislocation and bimodal grain structure of the samples were almost eliminated, resulting in uniform and fine grains, which were conducive to the formation of a more uniform and denser oxide film, thus improving the corrosion resistance of the alloy.