Anthracnose caused by Colletotrichum acutatum is one of the most devastating fungal diseases of pepper (Capsicum annuum L.). The utilization of chitin-binding proteins or chitinase genes is the best option to control this disease. A chitin-binding domain (CBD) has been shown to be crucial for the innate immunity of plants and activates the hypersensitive response (HR). The CaChiIII7 chitinase gene has been identified and isolated from pepper plants. CaChiIII7 has repeated CBDs that encode a chitinase enzyme that is transcriptionally stimulated by C. acutatum infection. The knockdown of CaChiIII7 in pepper plants confers increased hypersensitivity to C. acutatum, resulting in its proliferation in infected leaves and an attenuation of the defense response genes CaPR1, CaPR5, and SAR8.2 in the CaChiIII7-silenced pepper plants. Additionally, H2O2 accumulation, conductivity, proline biosynthesis, and root activity were distinctly reduced in CaChiIII7-silenced plants. Subcellular localization analyses indicated that the CaChiIII7 protein is located in the plasma membrane and cytoplasm of plant cells. The transient expression of CaChiIII7 increases the basal resistance to C. acutatum by significantly expressing several defense response genes and the HR in pepper leaves, accompanied by an induction of H2O2 biosynthesis. These findings demonstrate that CaChiIII7 plays a prominent role in plant defense in response to pathogen infection.