The separation of heavy rare earth elements, particularly Tm, Yb, and Lu, poses significant challenges due to their small differences in ionic radii and close chemical properties. Utilizing the variable valence properties of ytterbium can simplify the separation from adjacent elements. Therefore, a novel magnesium reduction technique was proposed, offering selective reduction and separation of ytterbium. In comparison to traditional methods such as sodium amalgam reduction and mercury cathode reduction, this approach achieves efficient separation of ytterbium and lutetium without the need for mercury, rendering it more environmentally friendly and safe. Under a non-oxidizing nitrogen atmosphere, utilizing magnesium powder as the reducing agent and a mixed solution of 1,4-dioxane and ethanol as the reaction solvent, only 20 min are required to complete one reduction-precipitation operation for simulated solutions. This yields a recovery of 70.89% and a purity of 97.5% for ytterbium (II) chloride. The optimal experimental conditions obtained are applied to natural heavy rare earth mixed solutions, resulting in the recovery of over 90% of ytterbium after three reduction-precipitation processes. Post-ytterbium separation, the residual solution is enriched with approximately three times the amount of thulium and lutetium, greatly facilitating subsequent separation processes. This method liberates ytterbium reduction-separation from dependence on mercury, offering not only rapid and efficient processing but also significant industrial prospects.