To develop a new separation technique for rare earth (RE) elements based on alloy diaphragms and molten salt electrolysis, a permeation experiment was conducted in LiCl–KCl eutectic melts containing RECl3 (RE = Dy, Nd, and La, 0.5 mol%) at 450 °C. In this technique, the alloy diaphragm functions as a bipolar electrode and RE ions permeate via three steps: (a) reduction of RE ions to form alloys on the anolyte side of the diaphragm, (b) diffusion of RE atoms in the diaphragm, and (c) oxidation of RE atoms to dissolve into the catholyte on the other side of the diaphragm. The experiment indicated that Dy selectively permeated through the alloy diaphragm consisting of RENi2. The permeated Dy/Nd molar ratio was ∼5, which was mainly determined by the selective alloy formation on the anolyte side of the diaphragm. However, the obtained Dy/Nd ratio was lower than that suggested by the preliminary experiment, in which a Ni substrate was simply alloyed in a LiCl–KCl–NdCl3–DyCl3 melt. Scanning electron microscopy observation and energy dispersive X-ray analysis of the diaphragm revealed that the lower selectivity compared to the preliminary experiment was attributable to the high diffusion rate of Nd atoms inside the alloy diaphragm.