An environmentally friendly magnesium fuel cell system using seawater electrolyte and atmospheric oxygen was tested under practical considerations for use as maritime power supply. The hydrogen rate and therefore the power density of the system were increased by a factor of two by using hydrogen evolution cathodes with a gas separation membrane instead of submerged cathodes without gas separation. Commercial magnesium AZ31 rolled sheet anodes can be dissolved in seawater for hydrogen production, down to a thickness below 100 μm thickness, resulting in hydrogen generation efficiency of the anode of over 80%. A practical specific energy/energy density of the alloy of more than 1200 Wh/kg/3000 Wh/l was achieved when coupled to a fuel cell with atmospheric air breathing cathode. The performance of several AZ31 alloy anodes was tested as well as the influence of temperature, electrolyte concentration and anode – cathode separation. The excess hydrogen produced by the magnesium hydrogen evolving cell, due to the negative difference effect, is proportional to the cell current in case of the AZ31 alloys, which simplifies system control considerably. Stable long-term operation of the system was demonstrated at low pressures which can be maintained in an open-seawater-submerged hydrogen generator. •Hydrogen is produced reproducibly in galvanic sea water cell by anodic dissolution of magnesium.•Use of hydrogen evolving Raney nickel cathodes with gas separation membrane.•Complete hydrogen generation fuel cell power supply demonstrated.•Advantages of magnesium AZ31 alloys demonstrated.•1200 Wh/kg, 3000 Wh/l electricity achieved from magnesium alloy sheets as the fuel.