Biodegradable films reinforced with bio-nanomaterials are a solution for developing active packaging systems, shelf-life extension and protection of environment against conventional packaging. This study aimed to characterize the biocompatible chitosan (CS) films formulated with nano-liposomal garlic essential oil (NLGEO) and assess the physicho-mechanical, morphology properties and also microbial and chemical changes in chicken fillets during storage time at 4 °C. NLGEO was obtained by thin-layer hydration-sonication method using glycerol and tween 80 as plasticizer and emulsifier, respectively. Different levels (0, 0.5, 1 and 2%) of NLGEO with average size of ~101 nm were added into the chitosan matrix and films fabricated by casting method. The average size, polydispersity index and zeta potential were ~101 nm, 0.127 and −7.23, respectively. Control samples showed higher values for pH, total volatile nitrogen (TVN), peroxide value (PV), thiobarbituric acid-reactive substances (TBARS), and microbial count including total viable count (TVC), coliforms, Staphylococcus aureus and psychrotroph bacteria than treated samples. The films with higher NLGEO content represented stronger inhibitory effects. The incorporation of NLGEO improved the mechanical properties and water resistance of active films. Microstructure analysis also showed a nearly smooth surface morphology and homogenous structure with a good dispersion for NLGEO films. Significant synergistic effects in chemical and bacterial preservation of chicken fillet samples were observed by NLGEO films. The optimal mechanical and barrier properties of chitosan-NLGEO films introduced it a potential active packaging to extend the shelf life of chicken fillet.