Chitin (CH) and Chitosan (CS) have wide-scale biomedical applications and are being studied extensively for their antimicrobial activity. Aspergillus terreus CBNRKR KF529976, isolated from the marine soils of Pichavaram, Tamil Nadu was used for the economic production of Chitin and Chitosan using three different media-Sabouraud sucrose broth, Hesseltine and Anderson medium, Andrade et al medium. The polysaccharides were extracted by alkali-acid treatment, and characterized by infrared spectroscopy. The highest growth rate was with Henderson and Anderson medium with a mycelial dry weight of 24.83g/L. The best yields of the polysaccharides are obtained with Sabouraud sucrose broth for chitosan (48.32 mg/g) and for chitin (344.8 mg/g). The peak was observed to be at 390.5 nm in case of A.terreus CH AgNP and at 450 nm in case of CS AgNP for UV-Spectroscopy. From the SEM image, Chitin AgNP’s exhibited smaller powder particle size and a nanoscale fiber-like surface structure. Ag/Chitosan BNCs showed show strong needle shaped structures. The EDS spectrum of A.terreus CH AgNP composite shows the peaks of C K, O K and Ag L. The atomic ratio of was found to be 87:11:0.75 wt %. The EDS spectrum of A.terreus CH AgNP composite shows the peaks of C K, NK, O K, Na K, Mg K, Cl K and Ag L. The atomic ratio of was found to be 20:3:19:1:1:0.46:53 wt %. The antibacterial activity of Chitin and Chitosan solution was found to be less than the Bionanocomposites indicating that the presence of the silver ion thereby increases the antibacterial strength of the polysaccharides. Chitin AgNP showed 91.5% dye inhibition in 72 hours and Chitosan AgNP showed 95.5% inhibition.