Plasma-activated chitosan (PAC) colloids for cancer treatment were obtained by using the cold atmospheric plasma technique. Chitosan solutions were irradiated by plasma ignited in argon gas and in a mixture of argon with nitrogen and oxygen gases in certain ratios. The structural modifications of chitosan and the chemical species generated in plasma were investigated by EPR, LC-MS/MS, XRD, and NanoSight methods. The cell viability test showed a selective cytotoxic effect on human breast carcinoma cells (MCF-7), while the human mammary epithelial cells (MCF-10A) were left unharmed. The cytotoxic effect was attributed mainly to chitooligosaccharides, but also to a synergistic effect with other compounds generated in very low concentrations in plasma, such as glyceric acid, ethyl acetate, or tricarballylic acid. The plasma irradiation improved the antioxidant activity and mucoadhesivity, while not affecting the hemocompatibility investigated by a standard hemolysis ex vivo test on mice blood. Moreover, the in vivo biocompatibility investigation at intraperitoneal administration of PAC in mice showed no statistically significant changes in the hematologic, biochemical, and immune system parameters, and no morphologic alterations of the liver and kidney. All these data indicate the cold plasma activation of chitosan as a straight method to produce biocompatible, antitumor systems.