Introduction The aim of this study was to determine the effect of a new type of Mg-3Nd-1Gd-0.3Sr-0.2Zn-0.4Zr (abbreviated to Mg-Nd-Gd-Sr) alloy on bone marrow mesenchymal stem cell (BMSCs) function derived from SD rats. Methods BMSCs were first isolated and cultured in vitro using the whole bone marrow adherence method, and identified by BMSC surface biomarkers and osteogenic induction. The in vitro biological safety of the Mg-Nd-Gd-Sr alloy was studied by cytotoxicity and apoptosis experiments, and the in vitro biological functions were studied by cell adhesion and cell proliferation experiments. Results The results showed that high-purity BMSCs were isolated using the whole bone marrow adherence method. Flow cytometry showed high expression of CD44 and CD90, and low expression of CD31 and CD45 in the BMSCs. Osteogenic induction showed that the BMSCs differentiated into osteoblasts, and mineralized nodules were observed. The cytotoxicity of the Mg-Nd-Gd-Sr alloy to SD rat BMSCs was 0–1 grade, suggesting that the Mg-Nd-Gd-Sr alloy had no significant cytotoxic effect on SD rat BMSCs; compared with the control group, there was no significant cell apoptosis in any of the experimental groups ( p > 0.05). Cell adhesion experiments showed that the number of adherent cells increased with the duration of culture with the exception of the 100% concentration group; compared with the control group, the 75% concentration group had the highest number of adherent cells at the 1st, 3rd, 5th, and 7th hours ( p < 0.05). Cell proliferation experiments showed that the number of cells in all experiment groups was higher than the control group ( p < 0.05) on the 1st, 3rd, 5th, and 7th days, with the highest number of cells in the 75% concentration group ( p < 0.05). Conclusion Our data indicate that the extracts of new type of Mg-Nd-Gd-Sr alloy has no apparent cytotoxicity to BMSCs, does not affect cell apoptosis, and has good biocompatibility. Different concentrations of Mg-Nd-Gd-Sr alloy extracts promoted the adhesion and proliferation of BMSCs. The alloy had good biological functions, and is thus a promising bone repair material.