In order to clarify the formation process of 6H-phase in RS P/M Mg97Zn1Y2 alloy, transmission electron microscopy (TEM) observations have been carried out. The initial microstructure of RS powder consists of cellular structure. The equiaxed grains about I Pun in average diameter are surrounded by rather wide Y and Zn rich amorphous grain boundaries. 6H-phase was observed at grain boundaries in the RS ribbon prepared at circumferential speed of 42 m/s. By lowering the circumferential speed, the 6H-phase at grain boundary in the RS ribbon changes to amorphous phase. The growth of 6H-phase starts from grain boundary in the RS ribbon annealed at 573 K for 1.2 ks. It can be concluded that the 6H-phase in RS P/M Mg97Zn1Y2 alloy crystallizes in the Y and Zn rich amorphous phase at grain boundary and then grows into grain interior during extrusion.