This study presents a comprehensive investigation of neodymium extraction from decrepitated magnet powder using liquid magnesium. Neodymium extraction from the decrepitated magnet into the liquid magnesium was assessed between 700 and 900 °C by measuring the average length of the diffusion zone in sintered samples of 3 mm-thickness. Experiments were conducted in a reactor which a design allows a homogeneous distribution of magnesium with efficient agitation. An empirical model was used to model the growth kinetics of the diffusion zone by using the Rosin–Rammler equation and estimate particle size distribution. The results were extrapolated to decrepitated magnet powder particles to simulate the neodymium extraction performances. Remarkably, the treatment time required was relatively short, not exceeding 22 minutes, and varied depending on the extraction target and temperature. Both temperature and the setpoint for the volume rate to be treated emerged as critical factors. Their impact on the process was thoroughly examined and discussed. These findings offer promising insights into the industrial feasibility of the use of liquid magnesium for rare-earth extraction from spent permanent magnet.