Micro arc oxidation (MAO) is a prominent surface treatment to form bioceramic coating layers with beneficial physical, chemical, and biological properties on the metal substrates for biomaterial applications. In this study, MAO treatment has been performed to modify the surface characteristics of AZ31 Mg alloy to enhance the biocompatibility and corrosion resistance for implant applications by using an electrolytic mixture of Ca3(PO4)2 and C10H16N2O8 (EDTA) in the solutions. For this purpose, the calcium phosphate (Ca-P) containing thin film was successfully fabricated on the surface of the implant material. After in-vivo implantation into the rabbit bone for four weeks, the apparent growth of soft tissues and bone healing effects have been documented. The morphology, microstructure, chemical composition, and phase structures of the coating were identified by SEM, XPS, and XRD. The corrosion resistance of the coating was analyzed by polarization and salt spray test. The coatings consist of Ca-P compounds continuously have proliferation activity and show better corrosion resistance and lower roughness in comparison to mere MAO coated AZ31. The corrosion current density decreased to approximately 2.81 × 10−7 A/cm2 and roughness was reduced to 0.622 μm. Thus, based on the results, it was anticipated that the development of degradable materials and implants would be feasible using this method. This study aims to fabricate MAO coatings for orthopedic magnesium implants that can enhance bioactivity, biocompatibility, and prevent additional surgery and implant-related infections to be used in clinical applications.