The present investigation was aimed to develop an easy, low-cost and eco-friendly method for the synthesis of Chitosan based iron oxide Nanoparticles (Cs-FeNPs) using shells of Penaeus monodon. The synthesized Cs-FeNPs were characterized by using Ultraviolet-Visible spectroscopy (UV), Fourier-Transform Infrared spectroscopy (FT-IR), X-ray Diffraction (XRD), Transmission Electron Microscope (HR-TEM) and Scanning Electron Microscope (SEM with EDAX). The visible dark black color formation and surface plasmon resonance at 233 nm indicates the biosynthesis of Cs-FeNPs. The TEM images showed polydispersal, and spherical Cs-FeNPs particle size of 3 to 5 nm. Antibacterial activity of chitosan aqueous extract and Cs-FeNPs showed an excellent activity against Gram-positive bacteria (Staphylococcus aureus and Enterococcus faecalis) and Gram-negative bacteria (Escherichia coli, Enterobacter, Klebsiella pneumoniae and Pseudomonas aeruginosa).