The investigation is to modify the mechanical and chemical properties of Mg alloys using a combination of rapid solidification and surface treatment. As the first approach, $Mg_{95}Zn_{4.3}Y_{0.7}$ was gas atomized and pressure sintered by spark plasma sintering process (SPS), showing much finer microstructure and higher strength than the alloys as cast. Further modification was performed by treating the surface of PM Mg specimen using Plasma electrolytic oxidation (PEO) process. During the PEO processing, MgO layer was initiated to form on the surface of Mg powder compacts, and the thickness and the density of MgO layer were varied with the reaction time. The thickening rate became low with the reaction time due to the limited diffusion rate of Mg ions. The surface morphology, corrosion behavior and wear resistance were also discussed.