Magnesium alloys, noted for their substantial mechanical strength and exceptional biocompatibility, are increasingly being considered for use in biodegradable implants. However, their rapid degradation and significant hydrogen release have limited their applications in orthopaedics. In this study, a novel Mg-RE-Sr alloy was created by friction stir processing to modify its microstructure and enhance its degradation performance. Through microstructural characterization, the friction stir processing effectively refined the grains, accelerated the re-dissolution of precipitates, and ensured a uniform distribution of these phases. The processed alloy demonstrated improved comprehensive properties, with an in vitro corrosion rate of approximately 0.4 mm/y and increases in ultimate tensile strength and elongation by 37 % and 166 %, respectively. Notably, in vivo experiments involving a rat subcutaneous implantation model revealed a slower degradation rate of 0.09 mm/y and a uniform degradation process, basically achieving the requirements for ideal performance in orthopaedic applications. The superior degradation characteristics were attributed to the synergistic effect of attenuated galvanic corrosion and the formation of a dense Y(OH)3/Y2O3 film induced by an exceptional microstructure with a highly solid-soluted matrix and uniformly refined precipitates. Meanwhile, the alloys exhibited excellent biocompatibility and did not cause undesirable inflammation or produce toxic degradation products. These improvements in biocompatibility and degradation characteristics indicate great promise for the use of this friction stir processed alloy in osteosynthesis systems in the clinical setting.