Structural and magnetic properties of a series of melt spun alloys Y1−xGdxCo2, with x = 0, 0.2, 0.4, 0.5, 0.6, 0.8 and 1, were investigated. The studied samples were prepared by arc melting in argon atmosphere and next were synthesized in the melt-spinning process in the form of flakes. During the synthesis, large number of defects such as free volumes, vacancies, and alloyed atoms were introduced into the samples. It was found that magnetic properties of the studied samples are determined by two factors: the effect of Y substitution by Gd and by the impact of microstructure defects. The substitution of gadolinium leads to a significant, linear increase in the Curie temperature, TC, at which transition to paramagnetic phase occurs, TC = 75, 195, 245, 280 K, for the samples with x = 0.2, 0.4, 0.5, 0.6, respectively, and is above 340 K for the samples with x = 0.8 and 1. At lower temperatures, of about 20–30 K, an additional peak in ac susceptibility is observed. Position of this peak depends both on frequency and on Gd content. The origin of the low temperature maximum appears to be due to magnetic ordering induced by microstructure effects.