The work involves design and fabrication of a new microfluidic platform to synthesize palladium (Pd) nanoparticles coated with trimethyl chitosan (TMC), for biomedical applications. TMC-coated palladium nanoparticles (TMC/Pd NPs) were prepared in continuous mode, using the microfluidic reactor. Droplet-generation approach was adopted since it provides a high degree of control over mixing and reagent loading. However, one major limitation was the cumbersome recovery of the synthesized nanoparticles, which required laborious “off-chip” procedures like droplet separation and nanoparticle re-suspension. These issues were overcome using the continuous flow microfluidic system integrated with separation system, to enable rapid synthesis and retrieval of TMC/PdNPs using a single platform. The synthesized nanoparticles were spherical, having an average diameter of 35–40 nm. These TMC/Pd NPs are yet unexplored for biomedical applications. Thus, their biocompatibility and cellular uptake was assessed using 3-(4,5-dimethylthiazol-2-yl)-2,5-diphenyltetrazolium bromide (MTT) assay, confocal microscopy and binding kinetics assay (Ligand Tracer® Green), which indicated the suitability of the formulation for biomedical applications.