The work aims to improve mechanical properties of magnesium alloy electroless plating. Different concentrations of nano-diamond were added in Ni-P plating solution by selecting reasonable Ni-P plating process parameters of magnesium alloy electroless plating. The coating morphology was compared by observing microstructure morphology of the obtained coating. Changes of coating structure were analyzed based on heat treatment of the composite coating. Wear resistance of the composite coating was detected by measuring friction coefficients of the coating before and after thediamond was added. Corrosion resistance of the composite coating was detected by checking quantity of corrosion spots on the coating. With the increase of nanodiamond concentration, morphology of the composite coating improved. The microstructure morphology was uniform and dense when 6 g/L of nano-diamond was added. Coating structure transformed from non-crystalline to crystalline and microhardness increased significantly as a result heat treatment. The friction coefficient of coating reduced and was stable when diamond was added. Compared with Ni-P coating subject to eletroless plating, less corrosion spots were present on the composite coating after nano-diamond was added. Mechanical properties of the coating are improved greatly since nano-diamond is added.