In this study, mechanical properties of bioactive glass (BAG) synthetic bone graft substitute was improved by containing ZrO₂ (ZrO₂-BAG), while maintaining advantageous biological properties of BAG such as osteoinductive and osteoconductive properties. The ZrO₂-BAG was produced by adding ZrO₂ in the following proportions to replace Na₂O in 45S5 BAG: 1% (Zr1-BAG), 3% (Zr3-BAG), 6% (Zr6-BAG), and 12% (Zr12-BAG). Properties including XRD, XPS, SEM, DSC, fracture toughness, and Vickers microhardness were evaluated. To assess the biological properties, Ca/P apatite formation, ion release, degradation rate, cell proliferation, ALP activity (ALP), and alizarin red S staining assay (ARS) were evaluated. Also, expression of osteogenic differentiation markers, Osteopontin (OPN), confirmed by immunofluorescence staining. Finally, an in vivo test was carried out to by implanting ZrO₂-BAG into the subcutaneous tissue of rats. The results of each test were statistically analyzed with one-way ANOVA followed by Tukey's post hoc statistical test. Amorphous ZrO₂-BAG was successfully produced with increased mechanical properties as the ZrO₂ content was increased. Additionally, ZrO₂-BAG exhibited a slower ion release and degradation rate compare to BAG without ZrO₂. Bioactivity of ZrO₂-BAG was confirmed with apatite layer formed on the surface, significantly higher proliferation rate and significantly enhanced ALP and the degree of ARS of the cells compare to respective controls. The tissue reactions observed in the in vivo study showed neo-formed vessels after implantation of ZrO₂-BAG.