Dementia or the loss of cognitive functioning is one of the major health issues in elderly people. Alzheimer's disease (AD) is one of the common forms of dementia. Treatment chiefly involves the use of acetylcholinesterase (AChE) inhibitors in AD. However, oxidative stress has also been found to be involved in the proliferation of the disease. Magnoflorine is one of the active compounds of Coptidis Rhizoma and has high anti-oxidative properties. Active principle-loaded nanoparticles have shown increased efficiency for neurodegenerative diseases due to their ability to cross the blood−brain barrier more easily. An in vitro study involving magnoflorine-loaded chitosan collagen nanocapsules (MF-CCNc) has shown them to possess inhibitory effects against oxidative stress and to some extent on AChE as well. In the current study, both nootropic and anti-amnesic effects of magnoflorine and MF-CCNc on scopolamine-induced amnesia in rats were evaluated. The treatment was done intraperitoneally (i.p.) once daily for 17 consecutive days with MF-CCNc (0.25, 0.5, and 1 mg), magnoflorine (1 mg), and donepezil (1 mg). To induce amnesia, hence, cognitive deficit rats were induced with scopolamine (1 mg/kg) daily for the last 9 days. Novel object recognition (NOR) and elevated plus maze (EPM) behavioral analysis were done to assess memory functioning. Hippocampal tissues were extracted to study the effect on biochemicals (AChE, MDA, SOD, and CAT), pro-inflammatory cytokines (IL-1β, IL-6, and TNF-α), and immunohistochemistry (brain-derived neurotrophic factor (BDNF) and DCX). MF-CCNc showed memory-enhancing effects in nootropic as well as chronic scopolamine-treated rats in NOR and an increase in inflexion ratio in EPM. MF-CCNc reduced the levels of AChE and MDA while increasing SOD and CAT levels in the hippocampus. MF-CCNc further lowered the levels of proinflammatory cytokines IL-1β, IL-6, and TNF-α. These nanocapsules further increased the expression of BDNF and DCX that are necessary for adult neurogenesis. From the research findings, it can be concluded that MF-CCNc has high anti-amnesic properties and could be a promising candidate for the treatment of AD.