The present study was to develop a hybrid chitosan-based bionanocomposite for potential bone tissue engineering applications. Chitosan (C)/Poly(vinyl alcohol) (P)/nano bioactive glass (B)/nano Zinc Oxide (Z) were fabricated by sol-gel assisted solvent casting method. In this method, several CPBZ nanocomposites have been studied by varying the ratios of nano ZnO (0.05%, 0.1%, 0.2%) to yield CPBZ1, CPBZ2 and CPBZ3 hybrid scaffolds. TEM, FESEM- EDAX, XRD and FTIR analyses were performed to characterize the macrostructure of CPBZ bionanocomposites. Nano ZnO of size 20 nm and nano bioactive glass of size 6–10 nm was synthesized and characterized by TEM analysis. The in vitro bioactivity studies confirmed the formation of apatite minerals that results in direct bone bonding implant. SEM revealed the macroporous structure with a pore size of about 10 µm and hydrophilic rough surface. The phase composition of nano ZnO embedded in CPBZ scaffolds was examined by XRD. The characteristic functional groups and the chemical interactions associated with the organic-inorganic phase were analyzed by FTIR. The results of mechanical studies by a universal testing machine (UTM) demonstrated an increase in the tensile strength and apparent density after the addition of nano bioactive glass and nano ZnO. The integration of nano Zinc Oxide in the polymer matrix increased the swelling ratio up to 298% and maintained the delayed biodegradation behavior around 38%, while the pH remained neutral (7.4). The antibacterial activity evaluated by Salmonella typhi and Enterococcus faecalis pathogens showed a better zone of inhibition for gram positive E. faecalis. The hemocompatibility study proves that the CPBZ nanocomposites are blood compatible and showed a hemolytic ratio of less than 2%. The results demonstrated that the prepared bionanocomposites could act as an extracellular matrix in osteogenic tissue engineering.