In order to improve the corrosion resistance and bioactivity of a biodegradable magnesium alloy, we have recently prepared a nanostructured diopside (CaMgSi2O6) coating on AZ91 magnesium alloy through a combined micro-arc oxidation (MAO) and electrophoretic deposition (EPD) method (reported elsewhere). In this work, we performed a detailed biocompatibility analysis of the implants made by this material and compared their performance with those of the uncoated and micro arc oxidized magnesium implants. The biocompatibility evaluation of samples was performed by culturing L-929 cells and in vivo animal study, including implantation of samples in greater trochanter of rabbits, radiography and histological examinations. The results from both the in vitro and in vivo studies indicated that the diopside/MAO coated magnesium implant significantly enhanced cell viability, biodegradation resistance and new bone formation compared with both the uncoated and the micro-arc oxidized magnesium implants. Our data provides an example of how the proper surface treatment of magnesium implants can overcome their drawbacks in terms of high degradation rate and gas bubble formation under physiological conditions. Published by Elsevier B.V.