New biocompatible and biodegradable Mg–Nb composites used as bone implant materials are fabricated through powder metallurgy process. Mg–Nb mixture powders are prepared through mechanical milling and manual mixing. Then, the Mg–Nb composites are fabricated through cold press and sintering processes. The effect of mechanical milling and Nb particles as reinforcements on the microstructures and mechanical properties of Mg–Nb composites are investigated. The mechanical milling process is found to be effective in reducing the size of Mg and Nb particles, distributing the Nb particles uniformly in the Mg matrix and obtaining Mg–Nb composite particles. The Mg–Nb composite particles can be bound together firmly during the sintering process, result in Mg–Nb composite structures with no intermetallic formation, lower porosity, and higher mechanical properties compared to composites prepared through manual mixing. Interestingly, the mechanical properties of manually mixed Mg–Nb composites appear to be even lower than that of pure Mg.