300 MPa grade biodegradable Zn-2Cu-xMg (0.08, 0.15, 0.5, and 1 wt.%) alloys with different bimodal grain structures were obtained by casting and hot extrusion. The effects of the Mg element on the microstructure, mechanical properties, and dynamic recrystallization (DRX) behavior of the as-extruded Zn-2Cu-xMg alloys were investigated. The obtained results showed that CuZn4 butterfly particles and eutectic net structure (η-Zn + Mg2Zn11) are formed in the as-cast Zn-2Cu-xMg alloys. The as-extruded Zn-2Cu-0.08Mg and Zn-2Cu-0.15Mg alloys exhibited finer DRXed and coarser unDRXed grains with an average grain size of 8.5–8.8 μm, while Zn-2Cu-0.5Mg and Zn-2Cu-1Mg alloys were almost composed of completed DRXed grains with an average grain size of 4.2–6.5 μm. Nanoprecipitates ε-CuZn4 were uniformly precipitated in both DRXed regions and unDRXed regions. Continuous DRX (CDRX) and twinning-induced DRX (TDRX) were the main mechanisms at a low Mg content; Discontinuous DRX (DDRX) and particle-stimulated nucleation (PSN) were strengthened with the addition of Mg. The improved yield strengths in Zn-2Cu-xMg originate from grain boundary strengthening, Orowan strengthening, and hetero-deformation-induced (HDI) strengthening. The fracture elongations are mainly affected by the synergistic effect of bimodal grains, non-basal < c + a > dislocations, and the secondary phases.