Hydroxyapatite (HAp) is a bioactive and biocompatible material possessing osteoconductive properties used widely in the biomedical sector. In the present study, synthesis of hydroxyapatite (HAp) using a Klebsiella pneumoniae SM24 (phosphate solubilizing bacteria) isolated from the slaughterhouse. HAp synthesized using biological source showed efficient and positive enzymatic activity in the National Botanical Research Institute Phosphate Medium (NBRIP). Characterization of HAp using FTIR revealed the presence of phosphate group hydroxyapatite and XRD spectra showed polycrystalline nature. The morphological characterization of HAp using FESEM revealed the mesoporous structure and EDX spectrum indicated presence of Ca and P as the major components. In addition, a new bone composite was prepared using the synthesized HAp, Gelatine (G), Chitosan (C), Fibrin (F) and Bone ash (HApGCF) using Simulated Body Fluid (SBF) solution. The confirmation of chemical and structural characteristics of HApGCF bone composite was achieved using FTIR, XRD and SEM analyses. The HApGCF bone composite was tested over osteoblast MG-63 cells showing effective biocompatibility and osteoblast attachment on the composite surface. Therefore, the present report proposes the in vitro application of HApGCF bone composite as a replacement for major bone damage and injury in a biocompatible and non-toxic way.