A new process is proposed for separation and recovery of rare earth metals from wastes. This process utilizes molten salt electrolysis and an alloy diaphragm. The diaphragm functions as a bipolar electrode and enables selective permeation of rare earth ions via the following steps: (a) Rare earth ions are produced by either anodic dissolution of wastes containing rare earth metal or addition of low purity rare earth salts in the anolyte. (b) The rare earth ions are electrochemically reduced at the anolyte side surface of the alloy diaphragm to form rare earth alloy. (c) The rare earth metals in the alloy diffuse to the catholyte side surface of the alloy diaphragm and are dissolved into the catholyte as rare earth ions by anodic oxidation. (d) The rare earth ions in the catholyte are recovered as rare earth metals or alloys on the cathode. Although the diffusion rate of a metal in a solid alloy is generally too low for a separation process, it has been reported that a certain kind of rare earth alloy is formed at an extremely high rate during molten salt electrolysis. Such a phenomenon is applied in the above process. The expected advantages of this process are that rare earth metals will be effectively separated from impurities such as iron-group metals and that the selectivity for each rare earth metal will be controllable by adjusting electrolytic conditions like melt and alloy compositions, potential of the alloy diaphragm, etc. As a preliminary examination, the bottom of a container made of Ni film and containing an eutectic LiCl-KCl melt was immersed in another eutectic LiCl-KCl melt. The inside melt and the outside melt were used as anolyte and catholyte, respectively. First, DyCl(3) was added to the anolyte, and the container was alloyed with Dy by potentiostatic electrolysis. Second, NdCl(3) was added to the anolyte, and a constant current was passed between a carbon anode in the anolyte and an Al plate cathode in the catholyte. The amounts of Dy and Nd in the catholyte were analyzed by ICP-AES. The result indicated that Dy and Nd permeated from the anolyte to the catholyte according to the mechanism mentioned above. Another preliminary examination was performed in LiCl-KCl-DyCl(3)-LaCl(3) systems with and without FeCl(2), in order to confirm the selectivity during the alloying step. Regardless of the presence of FeCl(2), DyNi(2) was selectively formed on a Ni plate cathode by potentiostatic electrolysis, which indicates a high possibility of separation of Dy from La and Fe.