The poor corrosion resistance and high susceptibility to stress corrosion cracking (SCC) of magnesium alloys limit their potential in biodegradable implant applications. This study systematically investigates the corrosion behavior and SCC resistance of ZK60 magnesium alloy processed by multi-directional compression (MDC). A combination of electrochemical measurements, slow strain rate tensile (SSRT) testing, and advanced microstructural characterization was employed to evaluate the material’s performance in phosphate buffer solution (PBS). The results demonstrate that MDC processing significantly refines the grain structure from 19.69 µm (T4) to 7.89 µm (12MDC), simultaneously increasing dislocation density and fragmenting second-phase particles. These microstructural modifications shift the corrosion mechanism from localized pitting to uniform corrosion, reducing the electrochemical corrosion rate by 42.8% and the hydrogen evolution corrosion rate by 88.6% in the 12MDC sample. Furthermore, the ε- and UTS-related SCC susceptibility indices are reduced by 14.7% (12MDC) and 17.5% (6MDC), respectively, compared with the T4 sample, which is attributed to the dense twin/grain boundary networks that deflect cracks and dissipate fracture energy. The synergistic effects of grain refinement, dislocation strengthening, and Orowan mechanism collectively enhance both mechanical properties and corrosion resistance. This work confirms that MDC processing effectively improves the functional reliability of ZK60 alloy for biomedical applications through microstructural optimization.