This study investigated whether calcium (Ca) addition improved the recovery of neodymium (Nd) and dysprosium (Dy) from Nd-Fe-B magnet scrap using magnesium (Mg)-based liquid metal extraction (LME). Traditional LME processes are limited to temperatures up to 850 °C due to oxidation issues, reducing the efficiency of rare earth element (REE) recovery, especially for Dy. By adding 10 wt.% Ca to Mg and increasing the processing temperature to 1,000 °C, we achieved nearly 100% Nd and approximately 38% Dy recovery, compared to 91% and 28%, respectively, with pure Mg at 850 °C. However, excessive Ca addition (20 wt.%) decreased the recovery efficiency due to the formation of stable intermetallic compounds. These results highlight the critical role of Ca in optimizing REE recycling from Nd-Fe-B magnet scrap.