In the present study, the distribution of Ag in the coating formed on Mg-Ag alloy by plasma electrolytic oxidation (PEO) and its ionic release kinetics when exposed to a 0.9 wt.% NaCl solution at 37 °C have been investigated. Both metallic Ag and Ag oxide particles with ~5 to ~40 nm in diameters were observed in the PEO coating. Further, an Ag-enriched layer of ~20 nm in thickness at the substrate/coating interface was also observed. The PEO coating on the Mg-Ag alloy not only increases its corrosion resistance with the corrosion current density decreasing by up to 3 orders of magnitude from 8.04 × 10⁻³ to 4.03 × 10⁻⁶ A/cm², but also controls the release of Ag⁺ to the level that is sufficient for anti-infective efficacy without causing cytotoxicity to mammal cells.