Recently, the attention of researchers has been drawn toward the synthesis of chitosan derivatives and their nanoparticles with enhanced antimicrobial activities. In this study, chitosan derivatives with different azides and alkyne groups were synthesized using click chemistry, and these were further transformed into nanoparticles by using the ionotropic gelation method. A series of chitosan derivatives was successfully synthesized by regioselective modification of chitosan via an azide-alkyne click reaction. The amino moieties of chitosan were protected during derivatization by pthaloylation and subsequently unblocked at the end to restore their functionality. Nanoparticles of synthesized derivatives were fabricated by ionic gelation to form complexes of polyanionic penta-sodium tripolyphosphate (TPP) and cationic chitosan derivatives. Particle size analysis showed that nanoparticle size ranged from 181.03 ± 12.73 nm to 236.50 ± 14.32 nm and had narrow polydispersity index and positive surface charge. The derivatives and corresponding nanoparticles were evaluated in vitro for antibacterial and antifungal activities against three gram-positive and gram-negative bacteria and three fungal strains, respectively. The minimum inhibitory concentration (MIC) of all derivatives ranged from 31.3 to 250 µg/mL for bacteria and 188 to1500 µg/mL for fungi and was lower than that of native chitosan. The nanoparticles with MIC ranging from 1.56 to 25 µg/mLfor bacteria and 94 to 750 µg/mL for fungi exhibited higher activity than the chitosan derivatives. Chitosan O-(1-methylbenzene) triazolyl carbamate and chitosan O-(1-methyl phenyl sulfide) triazolyl carbamate were the most active against the tested bacterial and fungal strains. The hemolytic assay on erythrocytes and cell viability test on two different cell lines (Chinese hamster lung fibroblast cells V79 and Human hepatic cell line WRL68) demonstrated the safety; suggesting that these derivatives could be used in future medical applications. Chitosan derivatives with triazole functionality, synthesized by Huisgen 1,3-dipolar cycloaddition, and their nanoparticles showed significant enhancement in antibacterial and antifungal activities in comparison to those associated with native, non-altered chitosan.