Mg-1.0wt%Zn-2.0wt%Y alloy powders were produced by gas atomization, and subsequently sintered by spark plasma sintering (SPS). The SPSed Mg-1.0wt%Zn-2.0wt%Y alloy, which showed a microstructure of well-bonded grains containing nano-sized powders of approximately 100 nm in diameter, was coated by a plasma electrolytic oxidation (PEO) method. Microstructure, mechanical properties and corrosion properties of PEO coatings were investigated and compared to those of normally sintered Mg-1.0wt%Zn-2.0wt%Y and cast Mg-1.0wt%Zn alloys. All coatings consisted of MgO and Mg2SiO4. The micro-hardness and friction coefficient of coatings on the SPSed Mg-1.0wt%Zn-2.0wt%Y alloy were higher than those on normally sintered Mg-1.0wt%Zn-2.0wt%Y and cast Mg-l.0wt%Zn alloys. However, the corrosion resistance in 3.5% NaCl solution for the SPSed Mg-1.0wt%Zn-2.0wt%Y alloy was between that for normally sintered Mg-1.0wt%Zn-2.0wt%Y alloy and cast Mg-1.0wt%Zn alloy.