Functionally graded hydroxyapatite coatings (FGHA) doped with 1, 3, and 6.5 wt % silver (Ag) have been deposited on Titanium using ion-beam-assisted deposition. Scanning transmission electron microscopy on coating cross sections confirmed the presence of FGHA coating with mostly amorphous layers at the top and mostly crystalline layers toward the coating interface as well as the existence of 10–50 nm Ag particles distributed throughout the thickness of the coatings. Calcium release in phosphate buffered saline solution showed a high release rate of Ca at the beginning of the test, and a gradual decrease in release rate thereafter to a minimum level until day 7. Similarly, the release rate of Ag in ultra pure water was initially high in the first 4 h and then gradually decreased over a 7 days period. Antibacterial tests have shown a reduction in the viability of S. aureus in Ag-doped coatings particularly in samples with higher Ag concentrations of 3 and 6.5 wt %. Cytotoxicity tests using an osteoblast cell line, on the other hand, have demonstrated that the samples with 6.5 wt % Ag have a negative effect on osteoblast cell response, proliferation, and apoptosis as well as a negative effect on protein and osteocalcin production. It is notable that the samples with 3 wt % Ag or less presented minimal cytotoxicity compared with control surfaces. Considering both the antibacterial and cytotoxicity effects, it is suggested that the 3 wt % of Ag in FGHA coatings can be favorable. © 2011 Wiley Periodicals, Inc. J Biomed Mater Res Part B: Appl Biomater 100B: 553–561, 2012.