Copper nanoparticles (Cu‐NPs) have garnered substantial interest in the field of nanotechnology due to their exceptional physical and chemical properties and cost‐effectiveness. However, challenges such as particle aggregation and rapid copper oxidation affect nanoscale production. This study systematically investigates the synthesis of colloidal Cu‐NPs using chitosan (Cts) as a stabilizer and reducing agent in the arc discharge system, comparing it to distilled water as a medium. Confirmation of the purity, size, and morphology of the Cu‐NPs is achieved through various physicochemical characterization methods. X‐ray diffraction patterns confirm the synthesis of highly pure face‐centered cubic (fcc) crystal Cu‐NPs. UV–vis analysis reveals absorption peaks at 572–585 nm, indicating pure copper. Fourier‐transform infrared spectroscopy shows peaks at 638 and 597 cm−1, corresponding to Cu─Cts bonds. Transmission electron microscopy images depict spherical nanoparticles ranging from 15 to 45 nm, with smaller sizes at higher Cts concentrations. The catalytic activity of Cu‐NPs in the degradation of 4‐nitrophenol to 4‐aminophenol is assessed, with Cu‐NPs synthesized in distilled water demonstrating superior catalytic properties compared to 0.10 wt.% Cts. This study highlights the efficacy of the arc discharge method in producing pure, uniformly sized Cu‐NPs with potential applications in catalysis.