Animal waste bone (AWB) is a significant component of food waste, generating millions of metric tons annually and posing environmental and economic challenges due to improper management. Despite its rich bioactive compound content, AWB is underutilized. To address these issues, we propose incorporating waste-derived calcium phosphate phases from AWB into an alumina toughened zirconia (ATZ) composite, forming a Hydroxyapatite/Tricalcium Phosphate/Whitlockite-ATZ biocomposite. The high-temperature treatment during ATZ consolidation promotes Hydroxyapatite (HAp) formation and decomposition of HAp to Tricalcium phosphate (TCP) phases. Trace amounts of magnesium in AWB aid in Whitlockite (Wk) formation. This triphasic material exhibits excellent biocompatibility and osteoconduction, suitable for bone regeneration. ATZ ensures mechanical stability and counters degradation of calcium phosphate phases. Although AWB incorporation reduces mechanical properties, the resulting ATZ-AWB biocomposite meets acceptable biomaterial standards. The present ATZ-AWB biocomposite possess bulk density, apparent porosity, hardness, and bending strength in the range of 3.7–5.2 g/cm3, 3.6–17%, 2–9 GPa and 620–1000 MPa respectively. AWB incorporation enhances bioactivity, as demonstrated by increased apatite layer formation in simulated body fluid (SBF). By fostering bioactivity, this approach not only tackles biocircularity but also offers economically accessible biomaterials, thereby advancing environmental sustainability and socioeconomic progress.