The present work aimed to develop a novel chitosan–PVA-based hydrogel sheet which forms an immobilizing matrix for silver nanoparticles (AgNPs). Silver nanoparticles were prepared by chemical reduction method. Silver nitrate was taken as the metal precursor and tri-sodium citrate as a reducing agent. These AgNPs were incorporated in to chitosan-PVA hydrogels in different concentrations (1%, 2%, 4% and 6%) to form F1, F2, F3 and F4 formulations respectively. The prepared chitosan and silver nanoparticle composite hydrogel sheets were characterized using U.V, FTIR, water absorption studies, SEM and Anti-microbial studies. The data shows the average diameter of AgNPs is in the range of 60-70 nm and is roughly spherical in shape. The AgNPs incorporated hydrogel sheets were bactericidal against Escherichia Coli (gram positive) and staphylococcus aureus (gram negative) and it showed good antibacterial effect by disc diffusion method. These results suggested that AgNPs incorporated chitosan hydrogel sheet could be a promising candidate for wound dressing applications.