The hydroxyapatite (HAp) powder preparation process was optimized to fabricate inositol phosphate-HAp (IP6-HAp) cement with enhanced mechanical properties. Starting HAp powders were synthesized via a wet chemical process. The effect of the powder preparation process on the morphology, crystallinity, median particle size, and specific surface area (SSA) of the cement powders was examined, together with the mechanical properties of the resulting cement specimens. The smallest crystallite and median particle sizes, and the highest SSA were obtained from ball-milling of as-synthesized HAp powder under wet conditions and then freeze-drying. IP6-HAp cement fabricated with this powder had a maximum compressive strength of 23.1 ± 2.1 MPa. In vivo histological studies using rabbit models revealed that the IP6-HAp cements were directly in contact with newly formed and host bones. Thus, the present chelate-setting HAp cement is promising for application as a novel paste-like artificial bone.