Chitin nanocrystals (ChNCs) are unique to all other bio-derived nanomaterials in one aspect: the inherent presence of a nitrogen moiety. By tuning the chemical functionality of this nanomaterial, and thus its charge and hydrogen bonding capacity, one can heavily impact its macroscopic properties such as its rheological and self-assembly characteristics. In this study, two types of ChNCs are made using acid hydrolysis (AH-ChNCs) and oxidative (OX-ChNCs) pathways, unto which deacetylation using a solvent-free procedure is utilized to create chitosan nanocrystals (ChsNCs) of varying degree of deacetylation (DDA). These nanocrystals were then studied for their rheological behavior and liquid crystalline ordering. It was found that with both deacetylation and carboxylation of ChNCs, viscosity continually increased with increasing concentrations from 2 to 8 wt %, contrary to AH-ChNC dispersions in the same range. Interestingly, increasing the amine content of ChNCs was not proportional to the storage modulus, where a peak saturation of amines provided the most stiffness. Conversely, while the introduction of carboxylation increased the elastic modulus of OX-ChNCs by an order of magnitude from that of AH-ChNCs, it was decreased by increasing DDA. Deacetylation and carboxylation both inhibited the formation of a chiral nematic phase. Finally, these series of nanocrystals were incorporated into biodegradable pectin-alginate films as a physical reinforcement, which showed increased tensile strength and Young's modulus values for the films incorporated with ChsNCs. Overall, this study is the first to investigate how surface functionalization of chitin-derived nanocrystals can affect their rheological and liquid crystalline properties and how it augments pectin/alginate films as a physical reinforcement nanofiller.