Mg alloys offer potential advantages over conventional biomedical implant materials because of their biodegradability and biocompatibility, but could be limited by their poor mechanical properties. In this study, laser shock peening (LSP), a surface processing technique, was applied to improve the mechanical properties of the AZ31B magnesium (Mg) alloy. It was demonstrated that LSP increased the hardness and yield strength of the Mg alloy. Due to the hardening, LSP significantly improved the wear resistance and fatigue performance of the Mg alloy. In addition, immersion tests carried out in cell culture medium revealed that LSP did not significantly increase Mg2+ release and weight loss. Furthermore, an in vitro cell culture study showed that the LSP-treated samples have cell-compatibility comparable to untreated samples. Thus, the LSP technique could, with further study, advance the clinical utility of Mg alloys in the orthopedic field. •LSP significantly decreased the coefficient of friction and improved the wear resistance of AZ31B alloy.•LSP significantly improved the tensile strength and fatigue resistance of AZ31B alloy.•LSP-treated samples have cell-compatibility comparable to untreated samples.