In the last few years, the use of biodegradable magnesium (Mg) alloys has evoked great interest in the orthopedic field due to great advantages over long-term implant materials associated with various side effects like allergy and sensitization and consequent implant removal surgeries. However, degradation of these Mg alloys results in ion release, which may cause severe cytotoxicity and undesirable complications after implantation. In this study, we investigated the cytological effects of various Mg alloys on cells that play an important role in bone repair. Eight different magnesium alloys containing varying amounts of Al, Zn, Nd and Y were either incubated directly or indirectly with the osteosarcoma cell line Saos-2 or with uninduced and osteogenically-induced human mesenchymal stem cells (MSCs) isolated from bone marrow specimens obtained from the femoral shaft of patients undergoing total hip replacement. Cell viability, cell attachment and the release of ions were investigated at different time points in vitro. During direct or indirect incubation different cytotoxic effects of the Mg alloys on Saos-2 cells and osteogenically-induced or uninduced MSCs were observed. Furthermore, the concentration of degradation products released from the Mg alloys differed. Overall, Mg alloys MgNd2, MgY4, MgAl9Zn1 and MgY4Nd2 exhibit good cytocompatibility. In conclusion, this study reveals the necessity of cytocompatibility evaluation of new biodegradable magnesium alloys with cells that will get in direct contact to the implant material. Furthermore, the use of standardized experimental in vitro assays is necessary in order to reliably and effectively characterize new Mg alloys before performing in vivo experiments.