The microstructure evolution of the Mg–5Zn–0.63Er (mass fraction, %) alloy containing quasicrystalline phase (I-phase) under the as-cast condition was investigated via different heat treatments. The results show that apart from the precipitation of the W-phase particles, the I-phase almost dissolves into the matrix after solid solution treatment at 480 °C for 10 h (T4 state). The solution-treated alloy was aged at 175 °C for 6–100 h (T6 state). The ultimate tensile strength of the peak-aged alloy is approximately 261 MPa companying with an elongation of 10.5%. The improvement of the tensile strength is mainly attributed to the presence of the rod-like MgZn 2 particles.