Chitosan and its derivatives are widely used in medical, cosmetic and food fields. In this study, chitosan-N-arginine (CSA) was synthesized and characterized by Fourier-transform infrared (FT-IR), 1H NMR, gel permeation chromatography (GPC), thermogravimetric analysis (TGA) and scanning electron microscopy (SEM). A novel antibacterial composite film consisting of CSA, hydroxypropyl methylcellose (HPMC) and glycerol was then prepared. The transparent and homogeneous film presented good compatibility between CSA and HPMC, confirmed by SEM. The thickness of the film was about 44.8 μm and its moisture content was 23.0%. Antimicrobial evaluation of CSA/HPMC film showed 9.0 mm bacteriostatic diameter zone against E. coli and 10.5 mm one against S. aureus. The film exhibited cell biocompatibility and promoted proliferation with L929 cell cytotoxicity test. Both antibacterial and cytotoxic results showed that the CSA/HPMC film was a promising material for medication, cosmetics and food preservation applications.