Mg–RE (Dy, Gd, Y) alloys show promising for being developed as biodegradable medical applications. It is found that the hydride REH₂ could be formed on the surface of samples during their preparations with water cleaning. The amount of formed hydrides in Mg–RE alloys is affected by the content of RE and heat treatments. It increases with the increment of RE content. On the surface of the alloy with T4 treatment the amount of formed hydride REH₂ is higher. In contrast, the amount of REH₂ is lower on the surfaces of as-cast and T6-treated alloys. Their formation mechanism is attributed to the surface reaction of Mg–RE alloys with water. The part of RE in solid solution in Mg matrix plays an important role in influencing the formation of hydrides.