In the present work, magnesium (Mg) AZ31 alloy was coated with a multifunctional membrane layer composed of ZnO nanoparticles (NPs) embedded in a poly(lactic acid) (PLA) matrix. We aimed to produce a stable coating that would be used to control the degradation rate of the Mg alloy and promote a local antibacterial activity. ZnO NPs were dispersed at 5 and 10 wt % in a PLA solution and dip-coated onto the AZ31 substrate. Surface topography, chemical composition, thickness, electrochemical corrosion performance, mass variation, antibacterial activity, adhesion performance, and cytotoxicity of an uncoated control and coated alloys were investigated. The results indicated that the incorporation of ZnO NPs at various concentrations affords a dramatic control over surface topography and degradation rates under in vitro and in vivo environmental conditions when compared to the uncoated Mg alloy control. In addition, the results confirmed that the coated layer exerts antibacterial properties and supports cell growth, indicating this system may have utility for bone tissue engineering applications.