Bone grafts play a critical role in the medical field, providing people the opportunity to recover from high impact trauma that caused serious complex fractures. Bone tissue engineering is a field that gained great interest in the last decade in the ability to design and develop three-dimensional scaffolds for bone grafting. According to BoneSA, a large supply of the cortical bone that is donated in South Africa each year, is unused and wasted because of its’ non-porous structure. However, cortical bone can be processed into a matrix using novel techniques that has the right properties to be used in bone grafting. Therefore, the aim of this study was to evaluate the in vitro biocompatibility of an extruded cortical bone matrix intended for bone grafting. This was achieved by screening potential formulations using particle size analysis, rheology, compression strength, and cytotoxicity tests. Based on the screening, formulations for extrusion were selected and evaluated based on physical properties — powder flow characteristics of formulations, compression and tensile strengths of extrudates, pore sizes, porosity, density, swelling and degradation. Additionally, cytotoxicity of each extrudate on 7F2 mouse osteoblasts was evaluated according to SANS guidelines for medical devices. Furthermore, the infiltration and migration of osteoblasts into the matrices were determined, along with quantifying bone formation biomarkers. Preliminary results indicated that formulations containing cortical porcine bone in combination with chitosan and carboxy methylcellulose had superior properties than the formulations containing only single functional excipient. Three formulations of varying excipient ratios were selected. The physical properties of the extruded cortical bone matrices were tested, and the results indicated that the matrices were not similar to human cancellous bone, apart from the pore sizes and compression strength. In vitro cytotoxicity tests confirmed that none of the matrices were toxic to 7F2 osteoblast cells. The infiltration study of the 7F2 cells into the extruded cortical bone matrix indicated that there was no cell attachment on the matrix after 2, 5, and 10 days. This was corroborated by the bone formation biomarkers, where there were significantly lower results compared to quality control groups. The lack of cell adhesion was attributed to adhesion points and physical properties of the extrudate. These shortcomings can be addressed by addition of adhesion proteins in the formulations, and adjustments to the extruder parameters.