We developed a composite biphasic calcium phosphate (BCP) scaffold by coating a nanocomposite layer, consisting of hydroxyapatite (HA) nanoparticles and polycaprolactone (PCL), over the surface of BCP. The effects of HA particle size and shape in the coating layer on the mechanical and biological properties of the BCP scaffold were examined. Micro-computerized tomography studies showed that the prepared scaffolds were highly porous (∼91%) with large pore size (400–700 μm) and an interconnected porous network of ∼100%. The HA nanoparticle (needle shape)-composite coated scaffolds displayed the highest compressive strength (2.1 ± 0.17 MPa), compared to pure HA/β-TCP (0.1 ± 0.05 MPa) and to the micron HA – composite coated scaffolds (0.29 ± 0.07 MPa). These needle shaped scaffolds also showed enhanced elasticity and similar stress–strain profile to natural bone. Needle shaped coated HA/PCL particles induced the differentiation of primary human bone derived cells, with significant upregulation of osteogenic gene expression (Runx2, collagen type I, osteocalcin and bone sialoprotein) and alkaline phosphatase activity compared to other groups. These properties are essential for enhancing bone ingrowth in load-bearing applications. The developed composite scaffolds possessed superior physical, mechanical, elastic and biological properties rendering them potentially useful for bone tissue regeneration.