Current tissue engineering strategies focus on the replacement of pathologically altered tissues by the transplantation of cells in combination with supportive biocompatible scaffolds. Scaffolds for tissue engineering strategies in musculoskeletal research require an appropriate mechanical stability. In recent studies, considerable attention has thus been given to magnesium alloys as biodegradable implants. The aim of this study was to characterize the biocompatibility of magnesium scaffolds by the inflammatory host response. Open porous scaffolds made of the magnesium alloy AZ91D were implanted into the distal femur condyle of rabbits and were compared to autologous bone, which was transplanted into the contralateral condyle in a 3 and 6 months follow-up group. After 3 months, magnesium scaffolds were already largely degraded and most of the original magnesium alloy has disappeared. Concomitantly, a fibrous capsule enclosed the operation site. Histological analysis revealed that the magnesium scaffolds caused no significant harm to their neighboring tissues. This study shows that even fast degrading magnesium scaffolds show a good biocompatibility and react in vivo with an appropriate inflammatory host response. Magnesium alloy based implants are therefore a very promising approach in the development of mechanically suitable and open porous scaffolds for the replacement of subchondral bone in cartilage tissue engineering.