Magnesium alloys are regarded as highly promising biomaterials for medical applications due to their low density, high strength, excellent biocompatibility, and ability to degrade safely within the human body. China, which possesses the world’s largest magnesium reserves, has a significant resource advantage for the research and development of medical magnesium alloys. In recent years, China has faced an increasingly severe societal challenge—population aging—which has led to a growing demand for biomaterials, particularly bone implant materials. However, existing magnesium alloys suffer from several limitations, including excessively rapid degradation, an imbalance between strength and toughness, and insufficient antibacterial properties. These drawbacks substantially hinder their clinical translation and large-scale application. To address these challenges and following the low-alloying design principle, an extruded Mg–Ag–In alloy was developed. This study focuses on a low-alloyed Mg–1Ag–0.5In composition with intrinsic antibacterial properties. The investigation examines its microstructural characteristics, mechanical performance, corrosion behavior, osteoblast compatibility, and antibacterial activity. The results showed that the extruded Mg–1Ag–0.5In alloy exhibited a favorable balance between strength and ductility. This synergy was primarily attributed to the coordinated deformation of tensile twins and multiple slip systems. During corrosion, the alloy transitioned from an initial mixed pitting and filamentous corrosion mode to a uniform filamentous corrosion pattern, which reduced the overall corrosion rate and facilitated the formation of a denser corrosion product layer. The corrosion driving force was mainly influenced by the grain orientation and the distribution of regions with high kernel average misorientation values. Furthermore, the extruded Mg–1Ag–0.5In alloy demonstrated excellent osteoblast compatibility, effectively promoting the proliferation of mouse embryonic osteoblast (MC3T3-E1) cells, and exhibited remarkable antibacterial activity.