There is growing need for environmentally friendly plastics to tackle problems of waste disposal. This makes it important to explore options to make biodegradable materials for packaging and coating applications. In this study we have leveraged the inherent anti-bacterial, biodegradable properties of chitosan (CS) and anti-bacterial and UV-absorbing properties of Zinc Oxide (ZnO) to develop CS-ZnO composite films. ZnO nanostructures (ZnO NS) were synthesized using orange peel oil (OP) by green chemical reduction method. ZnO incorporated films of chitosan were evaluated for their physicochemical properties. Presence of ZnO NS was confirmed using its characteristic signatures in UV-Visible spectrum, fluorescence measurement and FT-IR spectrum. The ZnO NS gave absorption and fluorescence maxima at 379 nm and 465 nm respectively. FT-IR spectra confirmed the vibration of the Zn-O at ~470 cm−1. The composite films prevented moisture permeability as compared to plain chitosan films. Chitosan-ZnO composite films showed higher tensile strength than plain chitosan films and also selectively blocked radiations in UV region due to UV-absorbing property of ZnO. The composite films also demonstrated good adhesion on glass and polystyrene substrates, enhanced tensile strength and anti-bacterial activity against E.Coli, compared to CS films, suggesting the potential of the developed films as a biodegradable, coating and packaging material.