One of Polyvinyl alcohol (PVA) films' well-recognized weaknesses is moisture sensitivity, which limits their applications. Various techniques have been employed to improve their hydrophobicity, such as blending and hydrophobic coating, but they have shown issues with compatibility and stability. In this study, a new method was proposed to modify PVA by grafting N-isopropyl acrylamide (NIPA) and blending it with chitosan (CS) to enhance its hydrophobic and antibacterial properties. The chemical structure of PVA-NIPA was characterized by FT-IR, 1H NMR, and XRD. By forming chemical bonds between PVA and NIPA through Michael's addition reaction, the moisture sensitivity of the film was significantly reduced. Additionally, the contact angle (CA) increased to 107.85° and the water vapor transmission rate (WVTR) decreased from 17.69 g / (m2h) to 6.53 g / (m2h). The PVA-NIPA/CS film also exhibited excellent mechanical properties, with Young's modulus of 303.67 MPa, tensile strength of 28.86 MPa, and elongation at break of 330.25%. Moreover, it showed better compatibility, high transparency, good UV-blocking properties, and strong antibacterial activity against Escherichia coli (E. coli) and Staphylococcus aureus (S. aureus), reducing the total colony counts by 2.53 and 3.44 logs, respectively. Thus, this work has generated new insights for expanding the application range of PVA films in packaging materials.