With recent developments in Embodied Artificial Intelligence (EAI) research, there has been a growing demand for high-quality, large-scale interactive scene generation. While prior methods in scene synthesis have primarily emphasized the naturalness and realism of the generated scenes, the physical plausibility and interactivity of scenes have been primarily left untouched. To bridge this gap, we introduce PhyScene, a novel approach dedicated to generating interactive 3D scenes characterized by realistic layouts, articulated objects, and rich physical interactivity tailored for embodied agents. Based on a conditional diffusion model for capturing scene layouts, we devise novel physics- and interactivity-based guidance functions encompassing constraints from both object collision, room layout, as well as agent interactivity. Through extensive experiments, we demonstrate that PhyScene effectively leverages these guidance functions for physically interactable scene synthesis, outperforming existing state-of-the-art scene synthesis methods by a large margin. We believe that our generated scenes could be broadly beneficial for agents to learn diverse skills within interactive scenes and pave the way for new research in embodied AI.