This study focuses on the characterization of the failure behavior of an extruded Mg10Dy1Nd alloy during stress corrosion. The microstructure, hardness, strength and corrosion behavior of binary alloys Mg10Dy and Mg1Nd are compared to those of the ternary alloy system. The ternary alloy Mg-Dy-Nd that is not fully recrystallized has the highest hardness but lacks ductility. The investigated alloys twin during plastic deformation. Static C-ring tests in Ringer solution were used to evaluate the stress corrosion properties, and stress corrosion could not be found. None of the alloys failed by fracturing, but corrosion pits formed to various extents. These corrosion pits were elliptical in shape and located below the surface. Some of the pits reduced the remaining wall thickness significantly, but the stress increased by the notch effect did not lead to crack initiation. Furthermore, the C-ring specimen was subjected to compressive loading until fracture. Whereas the Mg1Nd alloy showed ductile behavior, the alloys containing Dy fractured on the tensile side. The crack initiation and growth were mainly influenced by the twin boundaries. The Mg10Dy1Nd alloy had an inhomogeneous microstructure and low ductility, which resulted in a lower fracture toughness than that of the Mg10Dy alloy. There were features that indicate hydrogen-assisted fracture. Although adding Nd decreased the fracture toughness, it reduced the grain size and had a positive influence on the corrosion rate during immersion testing.