We report herein the synthesis of a new composite consisting of Cu nanoparticles (NPs) and chitosan (CS), which has been found to be stable in the presence of molecular iodine and has also high antimicrobial activities. The composite could be obtained when aqueous CuSO(4) was treated with hydrazine in the presence of CS. The spherical Cu NPs present in the composite were of average diameters 8±4 nm. The NPs were unstable in atmospheric conditions leading to the formation of oxides of Cu. On the other hand, when molecular iodine was added to the medium following synthesis the NPs were rather stable. Studies of antibacterial property were carried out on Gram-negative green fluorescent expressing Escherichia coli bacteria & Gram-positive Bacillus cereus bacteria. The minimum inhibitory concentration (MIC) of the iodinated composite on Escherichia coli was found to be 130.8 μg/mL, which contained 21.5 μg/mL Cu NPs. This determined value of MIC for Cu NPs was much lower than those reported in the literature. Zeta potential (ζ) measurements supported an attractive interaction between iodinated CS-Cu NP composite and bacteria which was further supported by electron microscopic images. Electron microscopic and flow cytometric studies revealed that the iodinated CS-Cu NP composite was attached to the bacterial cell wall, which caused irreversible damage to the membrane, eventually leading to cell death. Mechanism of bactericidal action of the iodinated composite is discussed in light of our findings.