Interbody fusion is recognized as the golden standard of surgical intervention for degenerative disc disease (DDD). Interbody fusion cage made of polyetheretherketone (PEEK) is commonly used in lumbar interbody fusion surgery in the treatment of DDD worldwide. However, there are some limitations of PEEK including their bio-inert nature and impediment to host bone integration. This study aimed to evaluate the degradation profile and osteoinductive potential of biodegradable Mg-Zn-Nd-Zr cages with/without micro-arc oxidation (MAO) coatings. The Mg-Zn-Nd-Zr alloy cages, whether coated with MAO or not, demonstrated commendable biocompatibility and biomechanical properties. Immersion and electrochemical tests show better corrosion resistance of MAO coatings in vitro. mRNA sequencing, RT-qPCR and Western blotting revealed that Mg-Zn-Nd-Zr and Mg-Zn-Nd-Zr/MAO had a better effectiveness on osteoinductivity. In vivo evaluations in ovine models over 12 weeks and 24 weeks post-implantation revealed radiological and histological evidence of enhanced bone formation adjacent to the Mg-Zn-Nd-Zr alloy cages compared to PEEK counterparts. Moreover, the MAO-coated cages exhibited a reduced propensity for gas formation. The Mg-Zn-Nd-Zr alloy is as a superior osteoinductive material compared with PEEK, with the MAO coating offering an advantage in mitigating gas production. Nonetheless, further research is warranted to refine the alloy's composition or surface treatments, particularly to address the challenges associated with rapid gas evolution during the early post-implantation period.