We report successful fabrication of polyetheretherketone/magnesium (PEEK/Mg) composite with a Mg content of 30 vol% selectively coated with hydroxyapatite (HA). The in vitro bio-corrosion and biocompatibility of the composite were examined for potential biomedical applications. A PEEK/Mg composite included compression molding at 370 °C, in which Mg particles were well dispersed in a PEEK matrix. In addition, the surfaces of Mg particles exposed to the matrix material were selectively coated with a HA layer by treatment in an aqueous solution. This HA coating considerably enhanced the in vitro bio-corrosion resistance and biocompatibility of the PEEK/Mg composite without sacrificing its excellent mechanical properties.