Cortical bone allografts suffer from high rates of failure due to poor integration with host tissue, leading to non-union, fracture, and infection following secondary procedures. Here, we report a method for modifying the surfaces of cortical bone with coatings that have biological functions that may help overcome these challenges. These chitosan-heparin coatings promote mesenchymal stem cell attachment and have significant antibacterial activity against both S. aureus and E. coli. Furthermore, their chemistry is similar to coatings we have reported on previously, which effectively stabilize and deliver heparin-binding growth factors. These coatings have potential as synthetic periosteum for improving bone allograft outcomes. Biotechnol. Bioeng. 2013; 110: 609–618. © 2012 Wiley Periodicals, Inc.