Tissue engineering techniques are continuously evolving towards providing better microenvironment along with therapeutic potential to address the skin tissue defects. Factors such as microbial infections, presence of excessive free radicals and depletion in antioxidant based scavenging systems pose serious challenges by prolonging inflammation and delaying the repair process. Incorporation of bioactive molecules in polymer based biomimetic scaffolds may present new vistas for handling chronic wounds. In this study, chitosan/collagen scaffolds incorporating 0.5, 1 and 2% (w/w) silymarin (CS-CO-SM) were synthesized and studied for their biocompatibility, in vitro release kinetics and anti-oxidant activity. The release kinetics of silymarin from the CS-CO-SM scaffold showed an initial burst followed by sustained release. The scaffolds were biocompatible and supported the recovery of COS-7 cells from UV induced oxidative stress. Further the CS-CO-SM(2) scaffolds were used to fabricate a bi-layer scaffold by layer upon layer arrangement with CS-Ag3 (3% Ag, w/w). The Ag was incorporated to impart antimicrobial property to the scaffold. The in vivo studies on bi-layer scaffolds were carried out in Wistar rat models at 3, 7 and 10 days post injury and the skin excisions were studied for wound contraction, histology (H&E staining), and lipid peroxidation. The bi-layer scaffold accelerated the process of wound healing with no inflammatory cells, proliferation of fibroblast, neovascularization and collagen deposition. By day 10 post transplantation of the scaffold, the skin had a structure similar to normal skin with complete re-epithelization. This bi-layer scaffold with antioxidant and antimicrobial properties promotes wound healing and is proposed as a potential tissue engineering material for managing chronic wounds.