This paper reports the development of a biodegradable porous scaffold made from naturally derived chitosan and alginate polymers for bone tissue engineering. The scaffold has a 3-D interconnected porous structure and was fabricated through thermally induced phase separation. The mechanical test showed that the scaffold has compressive strength of 0.46 ± 0.02 MPa — about 4 times that of the pure chitosan scaffold. The cell-material interaction study indicated that osteoblast cells seeded on the chitosan-alginate scaffold attach and proliferate well. The mineral deposition occurred after 3 days of culture and formed large chunks after 7 days. The chitosan-alginate scaffold was also found to have desirable swelling property and was structurally stable in solutions of different pH. The chitosan-alginate scaffold can be prepared from solutions of neutral pH allowing growth factors to be incorporated homogeneously into the scaffold for sustained release. This research demonstrated a technique by which a polymer-based biodegradable scaffold can be made to have high porosity up to 92% and excellent mechanical and biological properties.