Clinical applications of bio-absorbable magnesium (Mg) and its alloys can be enhanced by increasing their corrosion resistance, using surface modification and functionality. In this study, we synthesized graphene oxide (GO) through improved Hummers’ method and deposited it on biodegradable AZ31B Mg alloy for further characterization. Different suspensions of GO were prepared in various solvents, like deionized water, ethanol, and acetone by ultra-sonication. Electrophoretic deposition (EPD) was used to develop GO coatings on AZ31B Mg using different GO suspensions. Effect of various solvents on corrosion behavior, as well as in vitro biocompatibility, was studied. The optimized EPD parameters were 3 volts and 90 s for coating. Different characterization techniques were used to study GO and prepared coatings. Atomic force microscopy found that the average thickness of GO was ~1 nm. Electrochemical behavior of coatings was studied through electrochemical impedance spectroscopy (EIS) and Tafel analysis in Ringer’s lactate solution. Tafel analysis revealed that GO coatings deposited by GO water suspension increased corrosion protection efficiency of AZ31B Mg alloy by ~94%. After 72 h incubation in MC3T3-E1 osteoblast cells extract, in vitro analysis was performed to determine the cell viability and biocompatibility of the GO- coated and bare Mg samples. GO coatings deposited by GO water suspension demonstrated ~2× cell viability, as well as nontoxicity and better biocompatibility compared to the bare and other GO-coated Mg samples.