In recent years, due to increased awareness and push toward more environmentally sustainable technology, nanocomposite materials obtained from natural and renewable resources have received significant interest. Nanofibrous composite thin film consisting of polyvinyl alcohol (PVA), chitosan, and cellulose nanofiber (CNF) from sugarcane bagasse were prepared by solution casting method and ultrasonic processing. The dispersion of nanofiller in a solution is obtained by energetic agitation using the method of sonication, which resulted in improved mechanical properties. The results showed that an appropriate sonication time (30 min) with 40 wt % of bagasse cellulose nanofibers improved the film performance significantly as compared to other weight percentages of nanocellulose. The performance of the films containing different weight percentages of bagasse nanocellulose was comprehensively investigated in terms of mechanical properties, thermal stability, biodegradability, and antimicrobial properties. The highest mechanical strength of 80.47 MPa is recorded with treated CNF as compared to 70.13 MPa for untreated CNF. Thermal degradation of antibacterial PVA/CNF film was evaluated by thermogravimetric (TG%) values. The weight loss occurred at three temperature ranges, that is, 80-130, 250-350, and 380-430 C. The three spectrums reveal loss in water content, thermal deprivation of polymer chain, and detachment of bonds into molecules. Moreover, the homogeneous dispersion resulted due to the sonication process which was studied using scanning electron micrographs. Furthermore, the developed film exhibited strong antibacterial properties against Staphylococcus aureus and Escherichia coli bacteria and can be used in various applications in the field of agriculture and food packaging.