The current study focused to synthesize magnesium (Mg2+) and bismuth (Bi3+) co-doped bioactive glass (BG) nanoparticles (NPs) at ambient conditions. XPS studies confirmed the existence of Mg2+ as MgO and Bi3+ as Bi2O3 in co-doped BG NPs. XRD reported an increase in mean crystallite size from 0.1 ± 0.01 nm to 0.25 ± 0.04 nm with 0.5 to 1.5 mol% increase in Bi2O3 content. TGA revealed co-doping of Mg2+ and Bi3+ to BG NPs increased their thermal stability by 20 to 30 w/w% in comparison to the control. FTIR and NMR studies depicted open SiO2 network in co-doped BG NPs. HR-TEM evidenced co-doped BG NPs were of ~ 50 nm. The optical transmittance showed strong emission peak at 480 nm for co-doped BG NPs with decreased intensity with increasing Bi3+ ion concentration. In-vitro bioactivity, hemolysis and MTT assay revealed excellent bone binding ability, least toxicity and excellent biocompatibility.