Compared to magnesium (Mg) or iron (Fe) based biodegradable alloys, Zinc (Zn) alloys exhibit moderate degradation rates, thus regarded as promising implant materials for orthopedic and cardiovascular applications. However, Zn2+ released from degradation process may result certain degrees of cytotoxicity. Thus it is necessary to modify the surface of biodegradable Zn alloys for better biocompatibility. In this paper, a porous ceramic coating was successfully prepared on a Zn-1Mg alloy using plasma electrolytic oxidation (PEO). The effect of the PEO coating on the corrosion resistance and in vitro cyto-compatibility of the Zn-1Mg alloy were evaluated. It was noted that the thickness of the PEO coatings could be adjusted from 6.7?±?0.5 μm to 28.6?±?2 μm by increasing the oxidation time from 30 s to 120 s. Longer oxidation time led to a more rough and hydrophobic surface, which was consisted of ZnO and Zn2SiO4. The stable and protective oxide layer enhanced the corrosion resistance of the Zn-1Mg alloy. The PEO coated Zn-1Mg exhibited better blood compatibility and cyto-compatibility. Decreased hemolytic ratio and lower platelet adhesion was observed on the PEO coated Zn-1Mg sample. The enhanced cyto-biocompatibility is mainly attributed to small amount of Si2+ and Mg2+ released during the early degradation of the PEO coating.