Composite coatings of electrostatically assembled layer-by-layer anionic and cationic polymers combined with an Mg(OH)2 surface treatment serve to provide a protective coating on AZ31 magnesium alloy substrates. These ceramic conversion coating and layer-by-layer polymeric coating combinations reduced the initial and long-term corrosion progression of the AZ31 alloy. X-ray diffraction and Fourier transform infrared spectroscopy confirmed the successful application of coatings. Potentiostatic polarization tests indicate improved initial corrosion resistance. Hydrogen evolution measurements over a 2 week period and magnesium ion levels over a 1 week period indicate longer range corrosion protection and retention of the Mg(OH)2 passivation layer in comparison to the uncoated substrates. Live/dead staining and DNA quantification were used as measures of biocompatibility and proliferation while actin staining and scanning electron microscopy were used to observe the cellular morphology and integration with the coated substrates. The coatings simultaneously provided improved biocompatibility, cellular adhesion and proliferation in comparison to the uncoated alloy surface utilizing both murine pre-osteoblast MC3T3 cells and human mesenchymal stem cells. The implementation of such coatings on magnesium alloy implants could serve to improve the corrosion resistance and cellular integration of these implants with the native tissue while delivering vital drugs or biological elements to the site of implantation.