As a potential candidate for a biodegradable implant material, we designed the composition and investigated the properties of the magnesium alloy containing rare earth metals, namely yttrium and neodymium, with an addition of silver showing the evidence of antibacterial effects and promising corrosion rate in a body[2]. The as-cast Mg-2Y-1Nd-1Ag alloy exhibits hard regions of eutectics containing Y, Nd and Ag along the grain boundaries and contains also the long period stacking-ordered structure inside the Mg matrix. The eutectic regions continuously dissolve at 500 °C with increasing time while new particles develop in form of discs embedded in the magnesium matrix parallel to each other within a grain. During this process, an overall microhardness decreases to its minimum value. However, after homogenization annealing at 525 °C neither eutectic regions nor disc-shape particles were revealed in scanning electron microscope even though the microstructure development during the prolonged annealing at 525 °C leads to superior microhardness value. Microhardness measurements, electrical resistivity measurements at low temperature, scanning electron microscopy and synchrotron diffraction methods were used in this work.