Magnesium has become an interesting candidate in the field of bioabsorbable implant materials; it is an essential element in the human body, biocompatible and degradable due to its low corrosion resistance in a pH range below 11.5. However, in the human body (pH 7.4) a magnesium implant might degrade too quickly and lose its mechanical strength before the tissue has fully healed. However, the corrosion resistance can be improved for example by the choice of a suitable Mg alloy containing corrosion-inhibiting elements such as yttrium or by the deployment of surface heat treatments at high temperatures causing protective oxide layers to form. We studied the bio-degradation behaviour of a Mg–Y–RE alloy in different heat treatment states by electrochemical impedance spectroscopy and immersion testing in simulated body fluid. The heat treatments caused a change in microstructure and also the formation of a thermal oxide layer on the sample surface, which consisted mainly of Y2O3 and which slowed the degradation and increased the polarisation resistance significantly compared to the polished state. However, in some specimens localised corrosion attacks occurred which drastically weakened the protective effect of the oxide. Because the implant might be deformed during implantation resulting in the oxide cracking, we intentionally strained the samples and investigated the degradation performance. These cracks led to a decrease in polarisation resistance compared to the non-strained oxidised state, but in comparison to the polished state they still perform better. Macroscopically, the degradation process occurred in a homogeneous way without localised corrosion attacks. Microscopically, corrosion attacks started at the cracks and undermined the oxide layer with time.