In this study, silver nanoparticles (AgNPs) were incorporated into chitosan to develop Chitosan AgNP films. The structural, physical, and functional properties of chitosan AgNPs films were compared with those of chitosan and chitosan AgNPs films. Fourier transform infrared suggested the interactions between chitosan and AgNPs were based on coordination effect. This research was performed to extract chitosan from oyster shells which is a considered as a crustacean waste and to analyse its biological activities for commercial applications. Oyster is the common name for the various families of salt-water molluscs that live in brackish or marine habitats and which is abundant in chitin polysaccharide. Chitin is a beta-(1 4) linked GlcNAc polysaccharide and chitosan is a major derivative of chitin. Chitin and chitosan are linear biopolymer with exceptional bioactive properties, such as biocompatibility, biodegradability, nontoxicity, antimicrobial activity, and haemostatic activity. Oyster shell were demineralized and deproteinized to obtain chitin and it was deacetylated to yield chitosan. The extracted chitosan was characterized by degree of deacetylation and FT-IR Spectroscopy.