Composite hydrogel systems consisting of oxidized alginate, gelatin, and biphasic calcium phosphate were fabricated by the Schiff-base reaction and the effect of oxidation of alginate on the microstructure, material properties, and biocompatibility were evaluated. Alginate was modified by oxidizing the attached -OH groups to a -CHO group to facilitate interactions with the -NH₂ groups of gelatin. The increased interactions between the functional groups had several effects on the materials properties, physical behaviors, and bio-compatibility. A higher degree of oxidation and thereby a higher extent of crosslinking between the -CHO and -NH₂ groups resulted in an increase in water uptake and compressive strength, which was associated with a decrease in porosity, gelation time, bio-degradation rate, and to a smaller degree, biocompatibility. The hydrogel structure was highly porous and showed unique channel zed morphology with an extensive branching of the channels. The channels were not continuous and were divided into multiple segments by thin separators that were 5 µm thick and branched off of the 10-25 µm thick frame. The pores in the hydrogel system were interconnected and the porosity ranged from 44.45 to 67.89% with a pore size ranging from 100 to 300 µm. The compressive stress failure of the wet hydrogel was at 12.0 ± 1.2 MPa when the degree of alginate oxidation was 66.6%. The biocompatibility of the hydrogel system was excellent, although it was slightly lowered by oxidation. These hydrogels are promising biomaterials for bone regeneration with adjustable gelation and bio-degradation time, good mechanical strength, and excellent bio-compatibility.