A novel poly(epsilon-caprolactone)-organosiloxane hybrid material containing calcium salt (Si-O-PCL) was prepared and evaluated as a bioactive and degradable bone substitute material. The Si-O-PCL hybrid was synthesized by the end-capping of 3-isocyanatopropyl triethoxysilane with alpha,omega-hydroxyl PCL following sol-gel reaction with calcium nitrate tetrahydrate. Its tensile mechanical properties were evaluated, and additional specimens were exposed to simulated body fluid (SBF) for the time range from 3 h to 7 days. The SBF exposure led to the deposition of a layer of apatite crystals on the surface of the Si-O-PCL hybrid within 9 h of soaking. The tensile strength was around 18 MPa, Young's modulus was around 200 MPa, and the strain at break was around 290%. This material is likely to have a potential application as a bioactive and degradable bone substitute because of its apatite forming ability, biodegradability, and mechanical properties comparable to those of human cancellous bone.