In this work, we developed 120–150 nm sized nickel nanoparticles loaded chitin nanogels (Ni-Chitin NGs) by regeneration chemistry approach to investigate and determine its cytocompatibility and antibacterial activity against Staphylococcus aureus. The nickel nanoparticles were prepared by hydrothermal method. The prepared Ni-Chitin NGs were well characterized by SEM, FTIR, TG/DTA/DTG and XRD and the in vitro cytocompatibility was tested on A549 and L929 cells which showed that they are completely non-toxic. Ni-Chitin NGs showed better toxicity to the bacterial strains when compared to previous study with other nanoparticles using serial dilution method. The rhodamine labeled-Ni-Chitin NGs showed cellular localization on both L929 and A549 cells without perturbing their cellular constituents. These studies showed that the Ni-Chitin NGs could be used for various applications in biomedical filed.