All the time, it is difficult for magnesium alloys to equilibrate the relationship among strength, ductility and stretch formability at room temperature. Here, we added 0.6 wt% Zn into Mg-0.4Sn-0.7Y (TW00, wt%) alloy attempting to achieve a good combination among strength, ductility and stretch formability at room temperature. After extrusion, we found that Mg-0.4Sn-0.7Y-0.6Zn (TWZ000, wt%) alloy sheet exhibited a weak elliptical texture, accompanied with significant grain and second phase refinement. The formation of this weak elliptical texture was mainly originated from the joint contributions of multiple dynamic recrystallization (DRX) mechanisms consisted of twin-, compound- and dislocation slip-induced DRX behaviors. Grain boundary strengthening and second phase strengthening were mainly dedicated to the enhanced yield strength (similar to 150.0 MPa) and ultimate tensile strength (similar to 235.1 MPa), while non-basal slip, grain boundary cohesion, texture modification and twins commonly guaranteed the high ductility (similar to 39.8%). Besides texture modification and non-basal slip, a large number of twins altered the initial microstructure along with the formation of new twinning textures during stretch forming. These new twinning texture facilitated the higher Schmid factor (SF) for basal slip beneficial to the enhancement in stretch formability (similar to 7.0 mm). Therefore, TWZ000 alloy sheet provided an enormous potential to broaden magnesium alloys applications.