In the present scenario, the development of eco-friendly multifunctional biocidal substances with low cost and high efficiency, has become the center of focus. This study is, focused on the synthesis of magnesium oxide (MgO) and chitosan-modified magnesium oxide (CMgO) nanoparticles (NPs), via a green precipitation process. In this process, leaves extract of Plumbago zeylanica L was, used as a nucleating agent. The MgO and CMgO NPs exhibit face-centered cubic structures, as confirmed by XRD studies. Morphologically, the FESEM and TEM images showed that the MgO and CMgO NPs were spherical, with an average particle size of ~40±2 and ~37±2 nm, respectively. EDX spectra were used to identify the elemental compositions of the nanoparticles. By using FTIR spectra, the Mg-O stretching frequency of MgO and CMgO NPs were observed at 431 and 435 cm–1, respectively. The photoluminescence (PL) spectra of MgO and CMgO NPs, revealed oxygen vacancies at 499 nm and 519 nm, respectively, due to the active radicals generated, which were responsible for their biocidal activities. The toxicity effects of the nanoparticles developed, on cell viability (antibacterial and anticancer), were measured on the MCF-7 cell line and six different types of gram-negative bacteria. The antibacterial activities of the nanoparticles on: Klebsiella pneumoniae, Escherichia coli, Shigella dysenteriae, Pseudomonas aeruginosa, Proteus vulgaris and Vibrio cholerae bacteria, were studied with the well diffusion method. The MgO and CMgO NPs were tested on breast cancer cell line (MCF-7) via an MTT assay and it proved that CMgO NPs possess higher anticancer properties than MgO NPs. Overall, CMgO NPs showed a higher amount of cytotoxicity for both the bacterial and cancer cells when compared to the MgO NPs. Toxicity studies of fibroblast L929 cells revealed that the CMgO NPs were less harmful to the healthy cells when compared to the MgO NPs. These results suggest that biopolymer chitosan-modified MgO NPs can be used for healthcare industrial applications in order to improve human health conditions.