© 2020 Elsevier LtdThe aim of this study was to valorize hazelnut (Corylus avellana L) cake (HC), which is a by-product of hazelnut oil industry, in compound chocolate (HCC) as a partial replacer of sugar and milk originated powders (MOP: skimmed milk and whey powder in equal amounts). D-optimal mixture design was used to optimize HCC formulation. The optimum sugar, MOP, and HC amount were selected as 25.0–40.0, 6.0–21.0, and 0.0–15.0 g/100 g, respectively. The Casson model with high R2 values (0.9882–0.9948) was used to determine yield stress and plastic viscosity values of samples which were varied between 1.47 and 2.35 Pa, and 1.17–1.42 Pa s, respectively. Furthermore, particle sizes and water activity were determined between 25.67 and 78.20 μm and 0.31–0.38, respectively. Total phenolic content in HCC samples, their digestibility, and bioaccessibility ranged from 1389 to 3367; 2601–3955 mg GAE/kg, and 112–187% respectively. Also, hardness and brittleness were ranged between 7.85 and 11.55 N and 0.52–1.02 mm, respectively. The sensorial characteristics of the samples along with flow behavior and physico-chemical properties indicated that HC may be used as a healthy and low-cost ingredient in HCC formulation to partially substitute sugar and MOP.