The bio-fossil is a very important and versatile item found in fossil blocks. The most common use of the bio-fossil is to obtain DNA, which is used to create prehistoric creatures. When put in the analyzer, it can yield DNA, sand, bonemeal, cactus green, and occasionally, nothing.
Fossil models are also made with bio-fossils. Right-clicking on the ground while holding a bio-fossil will produce a random species' fossil model. Breaking the fossil model returns the bio-fossil.
Lastly, one bio-fossil is necessary to craft an analyzer and one to craft a Dinopedia.