The objective of this study is to design biomimetic organically modified montmorillonite clay (OMMT) supported chitosan/hydroxyapatite-zinc oxide (CTS/HAP-ZnO) nanocomposites (ZnCMH I-III) with improved mechanical and biological properties compared to previously reported CTS/OMMT/HAP composite. Fourier transform infrared spectroscopy, powder X-ray diffraction, scanning electron microscopy and transmission electron microscopy were used to analyze the composition and surface morphology of the prepared nanocomposites. Strong antibacterial properties against both Gram-positive and Gram-negative bacterial strains were established for ZnCMH I-III. pH and blood compatibility study revealed that ZnCMH I-III should be nontoxic to the human body. Cytocompatibility of these nanocomposites with human osteoblastic MG-63 cells was also established. Experimental findings suggest that addition of 5wt% of OMMT into CTS/HAP-ZnO (ZnCMH I) gives the best mechanical strength and water absorption capacity. Addition of 0.1wt% of ZnO nanoparticles into CTS-OMMT-HAP significantly enhanced the tensile strengths of ZnCMH I-III compared to previously reported CTS-OMMT-HAP composite. In absence of OMMT, control sample (ZnCH) also showed reduced tensile strength, antibacterial effect and cytocompatibility with osteoblastic cell compared to ZnCMH I. Considering all of the above-mentioned studies, it can be proposed that ZnCMH I nanocomposite has a great potential to be applied in bone tissue engineering.