The effect of ageing on the hardening and softening of Mg-Y-Nd alloys has been studied. An obvious age hardening occurs in alloys aged at 473 K for about 2 h, and then the hardness decreases sharply. A second hardening occurs during the following ageing. But alloys started softening after being aged at 523 K for 600 h. The microstructure investigations by TEM reveal that the first hardening owes to the occurrence of the dispersed precipitate, and the sharp fall of the hardness results from the dissolution of MgY phase. The occurrence and increasing of the precipitate phase and the forming of lathy structure in alloys result in the second hardening. The enlargement of j3 precipitate phase and the formation of nano-size MgO grains at the interface between matrix and (3 phase result in the softening of the Mg-Y-Nd alloy.