Introduction: Melatonin (MEL) loaded alginate-chitosan/beta-tricalcium phosphate (Alg-CH/β-TCP) composite hydrogel has been formulated as a scaffold for bone regeneration. MEL in the scaffold was anticipated to accelerate bone regeneration. The objective of this study is to observe signs of systemic toxicity and physical changes on surface defected bone for bone regenerative performance of the composite. Methods: The proximal-medial metaphyseal cortex of the left tibia of New Zealand white rabbit was the surgical site of the defect. A total of nine rabbits were randomly allocated to three groups; Group I; implanted with MEL loaded Alg-CH/β-TCP, Group II; Alg-CH/β-TCP and Group III defects were sham control. The rabbits were daily observed to determine systemic toxicity effects by composites. The physical changes to implanted site were observed using digital x-ray radiography and computerized tomography at weeks 0, 2, 4, 6 and 8 of post-implantation. Results: There were no clinical signs of systemic toxicity for all groups of rabbits. Digital radiography did not show adverse effects to the bone. Computerized tomography showed reduction in the area size and depth volume of the implantation site, but accelerated regeneration within the 8 weeks was not significantly different (P<0.05) between the groups. Conclusion: Overall, the study suggests that Alg-CH/β-TCP composite scaffolds with and without the addition of MEL are compatible to bone. The composite scaffolds reduced the area size and depth volume of the implanted site within the 8-week duration. However, no remarkable difference in the accelerated reduction of area size and depth volume was observed.