Magnesium and its alloys display interesting properties such as low density and biocompatibility but the lack of ductility and low strength compromise their performance in many applications. Fabrication of metal matrix composites may alleviate these challenges and improve overall performance. Magnesium matrix composites can be produced by cold consolidation of particles through high-pressure torsion and this paper summarizes recent findings in processing routes for the fabrication of composites, the microstructure developed, mechanical properties obtained and potential applications. It is shown that ductile materials can be mixed with magnesium by processing half samples placed side by side and hard and brittle materials can be incorporated by processing mixed particles. The distribution of phases may be controlled by the amount of rotation imposed during processing. Well-dispersed second phase particles within a continuous magnesium matrix can be obtained. Thus, it is possible to incorporate bioactive materials within a biodegradable magnesium matrix. Detailed characterization using transmission electron microscopy reveals the processing also refines the grain structure of the metallic matrix. The composites may display good ductility, improved strength and an ability to precipitate intermetallics through thermal treatment. The composites produced using high-pressure torsion have different potential applications including the development of bioactive and biodegradable biological implants.