The objective of this study was to design a novel dynamic fixation system with biodegradable components, apply it for lumbar fusion between articular processes and compare the fusion results and biomechanical changes to those of conventional rigid fixation. The novel dynamic fixation system was designed using a finite element model, stress distributions were compared and 24 mongrel dogs were randomly assigned to two groups and subjected to either posterior lumbar fusion surgery with a novel dynamic fixation system or titanium rods at the L5-L6 segments. Lumbar spines were assessed in both groups to detect radiographic, manual palpation and biomechanical changes. Histological examination was performed on organs and surrounding tissues. In the novel dynamic fixation system, stress was mainly distributed on the meshing teeth of the magnesium alloy spacer. The magnesium alloy components maintained their initial shape 8 weeks after the operation, but the meshing teeth were almost completely degraded at 16 weeks. The novel dynamic fixation system revealed an increased lateral bending range of motion at 8 weeks; however, both groups showed similar radiographic grades, fusion stiffness, manual palpation and histological results. The novel dynamic fixation system design is suitable, and its degradation in vivo is safe. The novel dynamic fixation system can be applied for posterior lumbar fusion between articular processes and complete the fusion like titanium rods.