Cytotoxicity and cytofunctionality of the in-house prepared novel bioactive glass coated hydroxyapatite (BGHA) is described here as a first step in characterizing the biocompatibility of the material for orthopaedic application. Sintered hydroxyapatite was coated with bioactive glass by a sol-gel method. The BGHA granule was 2 - 4 mm in size with a pore size in the range of 50 – 150 µm. FT-IR spectrum depicted the functional groups and XRD spectrum defined the crystallinity of the material. MTT assay proved high cellular activity and morphologically the cells showed normal proliferation with the expression of actin and vimentin network in the cytoplasm. In the resin sections, cells were found located on the walls of the pores while in osteoblast-cultured granules, cellular matrix was also observed along the pore interconnections. Recrystallization on the surface of the cultured granules did not support the adhesion of cells. The electron diffraction pattern displayed the high crystallinity of the raw granule while a diffused pattern of amorphous apatite like crystallites was observed for the cultured granules. High calcium and low phosphorous concentration was observed in the medium of the cells simultaneously with ALP and osteocalcin production. This pre-clinical evaluation proved BGHA, as a promising material for bone scaffolds.