We developed new modified embedded-atom method (MEAM) interatomic potentials for the Mg-Al alloy system using a first-principles method based on density functional theory (DFT). The materials parameters, such as the cohesive energy, equilibrium atomic volume, and bulk modulus, were used to determine the MEAM parameters. Face-centered cubic, hexagonal close packed, and cubic rock salt structures were used as the reference structures for Al, Mg, and MgAl, respectively. The applicability of the new MEAM potentials to atomistic simulations for investigating Mg-Al alloys was demonstrated by performing simulations on Mg and Al atoms in a variety of geometries. The new MEAM potentials were used to calculate the adsorption energies of Al and Mg atoms on Al (111) and Mg (0001) surfaces. The formation energies and geometries of various point defects, such as vacancies, interstitial defects and substitutional defects, were also calculated. We found that the new MEAM potentials give a better overall agreement with DFT calculations and experiments when compared against the previously published MEAM potentials.