In this study, a new alloy was created by adding 0.5% and 1% Gadolinium and Yttrium Rare Earth Elements to AZ31 Magnesium alloy. After extruding this alloy at 375 degrees C, closed die multidirectional forging was performed at 400 degrees C. The effect of alloy components on the microstructural change and their impact on mechanical properties were investigated. It was determined that the Rare Earth Elements added to the AZ31 cast alloy with a coarse-grained structure and the mechanical processes applied were effective in the microstructure. The addition of Gd and Y to the alloy promoted the formation of intermetallic phases such as (Mg,Al) 3 Gd and Mg 24 Y 5 in the microstructure, leading to a significant reduction in grain size. It was found that the samples obtained by adding 0.5% Gd and 0.5Y Rare Earth Elements to the alloy had higher hardness, yield strength, and tensile strength values compared to the cast and 1%Gd and 1%Y addition values. On the other hand, it was determined that the mechanical processes applied to the cast AZ31 alloy reduced the grain size and improved the mechanical properties.