It is enviable to develop an environment-friendly packaging material against petroleum-based polymers with enhanced functionality to satisfy sustainable development and to secure and extend the shelf life of food. In this work, biopolymer chitosan was mixed with montmorillonite (MMT K10) nanoclay and spirulina algae to produce a bio nanocomposite film with high strength and barrier properties. Spirulina and MMT K10 was initially incorporated into chitosan to fabricate the chitosan/MMT K10/spirulina bio nanocomposite and the intermolecular interactions between the chitosan, MMT K10 and spirulina was improved by the synergistic effect of covalent and hydrogen bonds. The surface colour and opacity of chitosan bio nanocomposite films were found to be increased by the inclusion of MMT K10 and spirulina. The bio nanocomposite films exhibited good solubility and swelling property. The chitosan bio nanocomposite film with 0.5 g of spirulina revealed the promising features such as high tensile strength of 46.3 MPa, low oxygen and watervapour transmission rate of 996.79 cc/(m2. day.atm) and 7.12 g/m2/day which was better than other various concentration of spirulina based films. Furthermore, the antimicrobial properties of bio nanocomposite films were determined by colony count method and the results suggested the films had excellent antimicrobial properties against both gram-positive and gram-negative microorganisms and the composite films showed the good biodegradable property. The fabricated chitosan-based MMT K10 and spirulina incorporated bio nanocomposite films could make valuable contributions in active food packaging applications due to its excellent properties.