Abstract Biodegradable polymer/bioceramic composite scaffolds can overcome the limitations of conventional ceramic bone substitutes, such as brittleness and difficulty in shaping. To better mimic the mineral components and microstructure of natural bone, a novel nano-hydroxyapatite (nHAp)–chitosan composite scaffold including gelatin and polymer (poly(lactic acid)) with high porosity was developed using a sol-gel method and subsequently lyophilized for efficient bone tissue engineering. The nanocrystalline structure of hydroxyapatite was observed using X-ray diffraction analysis and the composite showed crystallinity due to the presence of nHAp. The pore diameter of the composite containing 5% nHAp was found to be 125 μm, while the composites with 10%, 15%, and 20% nHAp revealed a smaller pore size in the range of 15–28 μm. The highest compressive strength of 5.5 MPa was observed for the 10% nHAp-containing scaffold, whereas thermogravimetric analysis showed 90%–94% degradation at a temperature of 600°C, which demonstrated its excellent thermal stability. Antibacterial and cytotoxicity test results revealed that the composite is resistant toward microbial attack and has low sensitivity in cytotoxicity. The compressive strength data suggests that the composite does not have enough strength as that of human compact bone; however, the highly porous structure as observed in scanning electron microscopy makes it possible for use as an excellent substrate in the spongy bone of humans.