Four kinds of extruded Mg–X at.% Zn binary alloys (X = 1.9, 2.4, 3.0, and 3.4) were used to examine the effect of precipitate volume fraction on fracture toughness. All the alloys had fine grain sizes of 1–3 μm and fine sphere-shaped precipitates of 50–60 nm. The volume fraction of precipitates increased with additional zinc content. The results of mechanical property tests showed that the extruded Mg–2.4 at.% Zn alloy exhibited the best balance of strength and fracture toughness. One of the reasons was the different volume fraction of precipitates at the grain boundaries, which was the source of void formation. According to the fracture surface observations and ductile fracture model analysis, the volume fraction of precipitates of 2%–4% was shown to be enough to improve the fracture toughness for the fine-grained magnesium alloys; i.e., higher contents of zinc atoms were not needed to enhance the mechanical properties.