In this study, high performance magnesium-yttria nanocomposite’s room temperature, strength and ductility were significantly enhanced by the dispersion of nano-sized nickel particles using powder blending and a microwave sintering process. The strengthening effect of the dispersed nano-sized nickel particles was consistent up to 100°C and then it gradually diminished with further increases in the test temperature. The ductility of the magnesium-yttria nanocomposite remained unaffected by the dispersed nano-sized nickel particles up to 100°C. Impressively, it was enhanced at 150°C and above, leading to the possibility of the near net shape fabrication of the nanocomposite at a significantly low temperature.