Due to the combination of many unique properties, magnesium alloys have been widely recognized as suitable metallic materials for fabricating degradable biomedical implants. However, the extremely high degradation kinetics of magnesium alloys in the physiological environment have hindered their clinical applications. This paper reports for the first time the use of a novel microwave-assisted coating process to deposit magnesium phosphate (MgP) coatings on the Mg alloy AZ31 and improve its in vitro corrosion resistance. Newberyite and trimagnesium phosphate hydrate (TMP) layers with distinct features were fabricated at various processing times and temperatures. Subsequently, the corrosion resistance, degradation behavior, bioactivity and cytocompatibility of the MgP coated AZ31 samples were investigated. The potentiodynamic polarization tests reveal that the corrosion current density of the AZ31 magnesium alloy in simulated body fluid (SBF) is significantly suppressed by the deposited MgP coatings. Additionally, it is seen that MgP coatings remarkably reduced the mass loss of the AZ31 alloy after immersion in SBF for two weeks and promoted precipitation of apatite particles. The high viability of preosteoblast cells cultured with extracts of coated samples indicates that the MgP coatings can improve the cytocompatibility of the AZ31 alloy. These attractive results suggest that MgP coatings, serving as the protective and bioactive layer, can enhance the corrosion resistance and biological response of magnesium alloys.