Magnesium alloys are not corrosion resistant in many applications and they require coating protection. In this study, we developed an electroless E-coating technique for magnesium alloys and discussed a cathodic E-coating deposition mechanism for the electroless E-coating process. This coating can be formed within a few seconds by dipping a magnesium alloy (i.e., AZ91D) in an E-coat bath without applying a current or voltage. The deposited electroless coat can offer good protection to the AZ91D magnesium alloy in 5 wt% NaCl corrosive solution as well as in a phosphating bath. The most interesting finding is that the electroless coating is not sensitive to local damage. No preferential corrosion attack occurred along the scratches made on the coating. Curing of the electroless deposited coat at 171°C for 25 minutes was found to significantly improve the stability or integrity of the coating, and consequently greatly enhance its corrosion protection performance in the NaCl solution and in phosphating bath.