The effect of extrusion on the microstructure, mechanical property, corrosion behavior, and in vitro biocompatibility of as-cast Mg-1.5Zn-1.2Y-0.1Sr (wt.%) alloy was investigated via tensile tests, electrochemical methods, immersion tests, methylthiazolyl diphenyltetrazolium bromide (MTT), and analytical techniques. Results showed that the as-cast and as-extruded Mg-1.5Zn-1.2Y-0.1Sr alloys comprised an α-Mg matrix and Mg3Y2Zn3 phase (W-phase). In the as-cast alloy, the W-phase was mainly distributed at the grain boundaries, with a small amount of W-phase in the grains. After hot extrusion, the W-phase was broken down into small particles that were dispersed in the alloy, and the grains were refined considerably. The as-extruded alloy exhibited appropriate mechanical properties that were attributed to refinement strengthening, dispersion strengthening, dislocation strengthening, and precipitation strengthening. The as-cast and as-extruded alloys exhibited galvanic corrosion between the W-phase and α-Mg matrix as the main corrosion mechanism. The coarse W-phase directly caused the poor corrosion resistance of the as-cast alloy. The as-extruded alloy obtained via hydrogen evolution and mass loss had corrosion rates of less than 0.5 mm/year. MTT, high-content screening (HCS) analysis, and cell adhesion tests revealed that the as-extruded alloy can improve L929 cell viability and has great potential in the field of biomedical biodegradable implant materials.