Microstructures and phase compositions of as-cast and extruded ZK60-xHo (x=0~5) alloys were analyzed by X-ray diffraction, differential scanning calorimetry, optical microscope, scanning electron microscope and transmission electron microscope. Meanwhile, tensile mechanical property and impact toughness were tested. The results showed that as-cast microstructure was refined gradually with increasing the Ho content. Mg-Zn-Ho new phase increased gradually, while MgZn2 phase reduced gradually to disappear. Second phase tended to distribute along grain boundary by continuous network. As-cast tensile mechanical property remained almost unchanged and impact toughness value αnK was low (9~17 J/cm2). After extrusion by λ=40/T=593 K, grain size reached the micron level (1~5 μm) and broken second phase distributed dispersedly. Extruded tensile mechanical property was enhanced obviously. Tensile strength σb at ambient temperature increased gradually from 355 MPa for ZK60 alloy to 375 MPa for ZK60-4.77Ho alloy, while elongation δ decreased gradually from 19.5% to 12.5%. σb at 473 K increased gradually from 120 MPa to 169 MPa. Meanwhile, αnK was enhanced to 26~54 J/cm2. Fine grain and few fine dispersed second phase enhanced the tensile mechanical property and impacted toughness of magnesium alloys effectively.