In the purpose of recycling of the magnesium alloy, powder mixture of AZ31 machined chips and boron powder, which was added boron contents as Mg/B=1/2 molar ratio, was mechanically alloyed for various milling times using planetary ball mill, for preparation of magnesium diboride (MgB₂). The phases formed by the mechanical alloying in the powder were investigated by X-ray diffraction analysis. The MgB₂ phase generates in the mechanically alloyed powder when the powder mixture was milled for a long time more than 72ks. And then, when the mechanically alloyed powder was heat-treated at 723K∼873K for 3.6ks, the MgB₂ phase grows up. When the mechanically alloyed powder was hot-pressed at various temperatures by compressing pressure of 200MPa, densely compacts was obtained at over 673K and the hardness and the rupture strength of the compacts increase with increasing of compacting temperature.