The structure, phase composition, corrosion and mechanical properties, as well as aspects of biocompatibility in vitro and in vivo, of a Zn-1%Mg-0.1%Dy alloy after equal-channel angular pressing (ECAP) were studied. The structure refinement after ECAP leads to the formation of elongated α-Zn grains with a width of ~10 µm and of Mg- and Dy-containing phases. In addition, X-ray diffraction analysis demonstrated that ECAP resulted in the formation of the basal texture in the alloy. These changes in the microstructure and texture lead to an increase in ultimate tensile strength up to 262 ± 7 MPa and ductility up to 5.7 ± 0.2%. ECAP slows down the degradation process, apparently due to the formation of a more homogeneous microstructure. It was found that the alloy degradation rate in vivo after subcutaneous implantation in mice is significantly lower than in vitro ones. ECAP does not impair biocompatibility in vitro and in vivo of the Zn-1%Mg-0.1%Dy alloy. No signs of suppuration, allergic reactions, the formation of visible seals or skin ulcerations were observed after implantation of the alloy. This may indicate the absence of an acute reaction of the animal body to the Zn-1%Mg-0.1%Dy alloy in both states.