Metal oxide nanoparticles (NPs) have demonstrated their potential to eliminate a wide range of drug-resistant bacterial pathogens and cancer cells in recent years. Iron oxide (Fe3O4) NPs have received significant attention due to their wide range of uses in the field of biomedicine. In specific, biopolymer-encapsulated Fe3O4 NPs were applied in cancer therapy owing to their biocompatibility and biodegradability. The current investigation describes a bio-inspired approach to synthesize chitosan-based Fe3O4 nanocomposite (NC) employing Cissus quadrangularis (CQ) plant extract in a sustainable manner. The physicochemical, morphological, compositional, surface texture and thermal stability properties of the biopolymer-coated nanocomposites were characterised using FT-IR, UV–vis, XRD, XPS, HR-SEM, TEM, TGA, BET and TGA analyses. The antibacterial efficacy was examined in strains of Escherichia coli and Staphylococcus aureus, which verified that the growth of bacterial pathogens was inhibited by a substantial increase in the concentration of composites. The DPPH assay results were utilized to assess the free radical scavenging activity. The in vitro anticancer activity was found to be significant against the human osteosarcoma (MG-63) cell line, with an IC50 value of 54 ± 0.50 μg/mL. The enhanced biocompatibility of NCs was confirmed by cytotoxic testing on human RBCs and normal L929 fibroblast cells.