Potato virus Y (PVY) causes serious loss in the yield and quality of potatoes. The effect of chitosan nanoparticles (CS-NPs) on the regeneration response and production of PVY-free plants under in vitro conditions was studied. Murashige and Skoog (MS) medium supplemented with 0.1 mg L−1 Gibberellic acid (GA3), 0.1 mg L−1 Naphthalene acetic acid (NAA) and 500 mg L−1 malt extract was used for regeneration of plantlets from sprouts. Double Antibody Sandwich Enzyme-Linked Immunosorbent Assay (DAS-ELISA) and Reverse Transcript Polymerase Chain Reaction (RT-PCR) was used for virus indexing of the mother plant and in vitro-regenerated plantlets. Explants of PVY positive potato plants were cultured on same medium amended with 100, 200, 250, and 300 mg L−1 of (CS-NPs). Shoot regeneration decreased from 100 to 200 mg L−1 as the concentrations of antiviral (CS-NPs) up to 250 mg L−1. It was decreased with the increase in the concentration of the antiviral (CS-NPs) up to 300 mg L−1. Antiviral (CS-NPs) at the concentration of 250 mg L−1 showed a positive effect on shoot regeneration. In vitro-regenerated plantlets were virus free and tested negative in both ELISA and RT-PCR. The level of 100 mg L−1 of (CS_NPs) produced 38.8% PVY-free plants and 30.50% of cultures showed shoot regeneration. The level of 200 mg L−1 of (CS-NPs) produced 49.6% PVY-free plants while 46.8% of cultures showed shoot regeneration. The level of 250 mg L−1 of (CS-NPs) was the most effective and produced 100.0% PVY-free plants and 100.0% of cultures showed shoot regeneration. Histopathological changes simultaneously with elucidation of resistance and growth enhancement were evident in the treated plants with (CS-NPs) than those untreated control. In conclusion, (CS-NPs) treatment is an effective tool to produce PVY-free sprouts explants and has potential for producing virus-free planting material for the potato industry.