Forging at room temperature was applied on the per-extruded Mg-Gd-Y-Zr alloy to investigate the effect of cold forging on the microstructure, mechanical properties and corrosion resistance of the alloy. Abundant micro shear bands with misorientations of 2–15° were generated in the as forged alloys. Tremendous enhancement in tensile yield strength was achieved after forging. With a quantitative investigation, micro band boundaries were considered to provide a great contribution to the reinforcement. The ultrafine structure resulting from the formation of micro shear bands led to increased corrosion resistance of the alloy.