The objective of this study was to develop “bone‐like” poly(vinyl alcohol) (PVA)/hydroxyapatite (HA)/type I collagen (Col) hydrogel composites that stimulate adhesion, proliferation, and differentiation of osteoblastic cells. The hydrogel composites were prepared by mixing PVA with nanoscale HA and Col using a physical mixing method. The concentration of the components was optimized during formulation development. PVA/Col/HA hydrogels were characterized for viscoelasticity, degree of swelling, mechanical strength, embedded erythromycin drug release, and cellular response of both osteoblastic MC3T3 cells and RAW 264.7 macrophage cells. Compressive strength tests confirmed that the PVA coating possessed greater elasticity and was mechanically enhanced by the freeze‐thaw treatment. PVA/Col/HA gel is biocompatible and nontoxic to MC3T3 preosteoblasts, and the reinforcement from HA and Col reduced the inflammatory response from macrophages. Our findings demonstrate that PVA composites are biocompatible, and enhance cell adhesion, proliferation, and differentiation in vitro. We propose that PVA/Col/HA hydrogels represent one of the promising implant surface coating matrices for the improvement of implant osseointegration. © 2012 Wiley Periodicals, Inc. J Biomed Mater Res Part A, 2012.