Magnesium alloys have long been recognized as promising degradable biomaterials, however, bacterial infection, poor mechanical and corrosion properties limit its clinical application. In this study, controlled aging of forged Mg-Mn-Gd alloy leads to the development of nano Mg₅Gd precipitate, which improved mechanical, corrosion and antibacterial performance without deteriorating cytocompatibility. High resolution transmission electron microscopy (HRTEM) observations confirmed nano-scale Mg₅Gd precipitates and their subsequent coarsening during transition from peak-aging to overaging. The nature of dislocation-precipitate interaction, size, fraction, and coherency-dependent characteristics of nano-scale Mg₅Gd precipitates are accountable for strengthening in aged specimens. The precipitation-dislocation interaction governed by precipitate-shearing mechanism contributes to pronounced strengthening in peak-aged specimen. The reduced volta potential difference between the galvanic couples (α-Mg and Mg₅Gd), residual strain removal, strengthened basal texture and fine semi-coherent Mg₅Gd precipitate of peak-aged specimen significantly improved the corrosion resistance. All the investigated specimens exhibit strong antibacterial performance against gram-negative Escherichia coli (DH5α) bacteria, primarily attributed to the release of Mg and Gd ions. The applied thermal treatment to the forged specimen exhibited no signs of cytotoxicity, rather promoted cell proliferation and osteogenic differentiation against MC3T3-E1 cells. Micro-CT and hard tissue histology by Masson’s trichome staining demonstrated highest bone-implant integration and active callus formation across the peak-aged implant in rabbit femur. Furthermore, the peak-aged specimen was well tolerated by all the vital organs without any histological abnormalities. Overall study demonstrated that the thermomechanical process optimization can effectively tailor the Mg-Mn-Gd alloy for successful internal fracture fixation application.