Room temperature atmospheric pressure microplasma (APM) was deployed for the first time for the in situ synthesis of anti-bacterial silver nanoparticle/chitosan (AgNP/CS) nanocomposites. The plasma induced liquid chemistry plays a role in the in situ formation of AgNP, the size distribution of which depends on the silver salt precursor concentration. The microplasma process has also simultaneously tailored the physical properties of the composites, through molecular chain scission and formation of physically crosslinked polymer network. The formation of AgNP within the in situ modified chitosan has led to nanocomposites with overall improved mechanical properties and better stability in simulated body fluid. Our plasma synthesized AgNP/CS nanocomposites also demonstrate effective antibacterial properties against E. coli and S. aureus bacterial strains, showing their promise in potential antimicrobial applications.