Development of new biodegradable implants and devices is necessary to meet the increasing needs of regenerative orthopedic procedures. An important consideration while formulating new implant materials is that they should physicochemically and biologically mimic bone-like properties. In earlier studies, we have developed and characterized magnesium based biodegradable alloys, in particular magnesium-zirconium (Mg-Zr) alloys. Here we have reported the biological properties of four Mg-Zr alloys containing different quantities of strontium or calcium. The alloys were implanted in small cavities made in femur bones of New Zealand White rabbits, and the quantitative and qualitative assessments of newly induced bone tissue were carried out. A total of 30 experimental animals, three for each implant type, were studied, and bone induction was assessed by histological, immunohistochemical and radiological methods; cavities in the femurs with no implants and observed for the same period of time were kept as controls. Our results showed that Mg-Zr alloys containing appropriate quantities of strontium were more efficient in inducing good quality mineralized bone than other alloys. Our results have been discussed in the context of physicochemical and biological properties of the alloys, and they could be very useful in determining the nature of future generations of biodegradable orthopedic implants.