The effect of Zr addition to the novel Al-Er-Y alloy on microstructure, phase composition, recrystallization behavior, mechanical properties and electrical conductivity is studied. Formation of the Al3Y, Al3Er and Al3(Er,Y) intermetallic phases in the Al-Er-Y alloy is proved by SEM. Zirconium leads to the formation of the Al3(Er,Y,Zr) eutectic phase. We demonstrate the formation of nanosized Al3(Er,Y) and Al3(Er,Y,Zr) dispersoids in the Al-Er-Y and Al-Er-Y-Zr alloys, respectively. The recrystallization temperature for the Al-Er-Y alloy at about 365 °C is recorded by dynamic mechanical analyzer. Zirconium addition to the Al-Er-Y alloy increases the recrystallization temperature to above 400 °C. The YS and UTS of the Al-Er-Y alloy are decreased after annealing of the rolled sheets from 130 to 115 MPa and from 142 to 125 MPa, respectively. The average tensile properties of the Al-Er-Y-Zr alloy in the deformed and annealed conditions are YS = 144 ± 3 MPa and UTS = 156 ± 3 MPa with 11 ± 1% elongation. The Al-Er-Y alloy demonstrates a good electrical conductivity of 64–64.7% IACS. Zirconium addition decreases electrical conductivity to 57% IACS. Display omitted •Al3Y, Al3Er and Al3(ErY) phases were formed in the AlErY alloy.•The formation of the 5 nm Al3(ErYZr) dispersoids in the AlErYZr alloy was showed.•Zr increased the recrystallization temperature of the AlErY alloy higher than 400 °C.•The YS = 144 MPa and UTS = 156 MPa with El. = 11% were found for the AlErYZr alloy.•The AlErY alloy demonstrated a good electrical conductivity in 64–64.7% IACS.