The Mg-Y-Zr system was studied via experimental investigation and thermodynamic modeling. Four diffusion couples and four key alloys of the Mg-Y-Zr system at 500 A degrees C were prepared. The phase relations of the Mg-Y-Zr system were investigated by means of X-ray diffraction, scanning electron microscopy, and electron probe microanalysis. No ternary compound was found at 500 A degrees C. The solubility of (alpha Zr) in the Mg-Y intermetallics, i.e., Mg24Y5, Mg2Y and MgY, was determined to be negligible. The differential scanning calorimetry measurement was performed on the Mg-Y-Zr alloys to obtain the phase transition temperature. The present thermodynamic calculations of the Mg-Y-Zr system matched well with the experimental data. The presently established Mg-Y-Zr phase diagram can offer a better understanding of the recent processing technique of creep-resistant magnesium alloys.