Novel FeAlCr oxide dispersion strengthened intermetallics that are processed by powder metallurgy have been developed as potential biomaterials. The alloys exhibit a small grain size and a fine dispersion of yttria provides the material with a high yield strength and depending on the alloy composition good ductility (up to 5%). The biocompatibility of the alloy was assessed in comparison with commercial alumina. Saos-2 osteoblast-like cells were either challenged with mechanically alloyed particles, or seeded onto solid samples. Viability and proliferation of cells were substantially unaffected by the presence of a high concentration of particles (1 mg/mL). Solid samples of novel FeAlCr intermetallic have shown a good biocompatibility in vitro, often approaching the behavior of materials well known for their biological acceptance (e.g. alumina). It has been found that osteoblasts are able to produce ALP, a specific marker of cells with bone-forming activity. In this respect, ALUSI alloys hold the promise to be suitable substrate for bone integration. The finding of no cytotoxic effect in the presence of the alloy particles is a reliable proof of the absence of acute toxicity of the material.