The AZ31B magnesium alloy coated with calcium phosphate (CA-P/AZ31B) was implanted in rabbit skeletal and muscular tissue in this study. The inflammatory reaction in skeletal and muscular tissue was observed around the magnesium alloy in vivo. The microstructure and cytotoxic effect of the magnesium alloy were detected. The results show that the release and degradation process of AZ31B magnesium alloy was efficiently delayed by coated with CA-P. The surface roughness of AZ31B magnesium alloy was raised by coated with CA-P, whereas the inflammation induced by AZ31B magnesium alloy was inhibited in vivo. By hemolysis tests, the hemolytic effect was significantly decreased for the CA-P/AZ31B magnesium alloy coated with CA-P. Therefore, the alloy would be a new generation of degradable and biocompatible materials for medical applications.