Magnetic hydroxyapatite (MHAp) exhibits excellent biocompatibility, making it an ideal candidate as a biomaterial. Recent investigations have shown that the combined effect of magnetite and hydroxyapatite nanostructures provide efficient means for diagnostic and therapeutic applications which can be controlled with an external magnetic field. For these applications an important aspect to be considered is the interaction of the MHAp nanoparticles (NPs) with biomolecules such as protein (P) and the subsequent biological response. The present study involves synthesis and characterization of Fe doped MHAp NPs, surface functionalized with trilithium citrate and cetyl pyridinium chloride having Li⁺ and Cl⁻ as counterions, respectively. The electrostatic interaction of the MHAp NPs (with and without surface functionalization) with proteins such as Hen egg white lysozyme and Pepsin A were investigated to study the P-NP interactions. The crystalline structure and compositions of these NPs were characterized using X-ray diffraction. The size and aspect ratio were measured using transmission electron microscopy. The P-NP interaction was characterized by Dynamic light scattering, Zetapotential measurements, UV–vis absorption and fluorescence emission spectroscopies. The conformational changes of the protein secondary structures were investigated by circular dichroism spectroscopy. The functionality of the protein after interaction with surface modified MHAp NPs were studied using activity assays.