The current work takes the benefit of utilizing a composite approach by reinforcing Mg with Zn, Cerium oxide - a rare earth and bone-friendly ceramic, and bioactive hydroxyapatite to develop magnesium-based MMCs for high structural integrity and low degradation inside the human body via stir casting technique in a protective Ar-SF6 environment. The friction stir processing (FSP) technique was employed to tailor the properties of as-cast Mg composites, resulting in further grain refinement and better dispersion of reinforced materials. Phase and microstructure analysis were analyzed via XRD, FESEM, and optical microscopy. During tensile tests, as-cast Mg-5Zn-1HA-1.5CeO2 improved 68.6% in yield strength and 16.3% in ultimate tensile strength. After FSP, the same composite resulted in an overall improvement of 114.6% in yield strength and 31.9% in ultimate strength compared to as-cast pure Mg. Dispersion of inert bioceramics within the Mg matrix results in higher polarization resistance as per Electrochemical impedance spectroscopy (EIS). At the same time, a remarkable 81.6% reduction in H2 emission and an 84.4% decrement in corrosion rate were found during the immersion study for Mg-5Zn-1HA-1.5CeO2 composites. All Mg-based composites exhibited no cytotoxicity as cell viability evaluated via MTT assay was found to be greater than 80% for 50% and 25% extract concentrations. The composite’s hemolysis rate was below 5%, indicating acceptable hemocompatibility. This work provides insight into developing rare earth oxide-incorporated Mg composites with better mechanical capabilities and degradation resistance while avoiding the long-term cytotoxicity of rare-earth materials.