Drug resistance and a lack of effective antifungal treatments have spurred the research and development of novel therapeutics to combat the fungus Candida albicans. Candida is ubiquitous yeast that is often colonized on the skin and mucosal membranes and is implicated in opportunistic fungal disorders all over the globe. In particular, nanoparticles (NPs) made of metals and metal oxides are a novel kind of functional nanohybrids with fascinating physio-chemical characteristics that have potential uses in nanoscience and medicine. In this current novel research attempt, a decisive biocompatible nanocomposite material with conflation of organic and inorganic sources has been successfully developed using a bis-triazole antifungal agent, fluconazol (FCZ)-assimilated zinc oxide (ZnO) as filler, and chitosan (CS) as matrix by a solution-based chemical method for potent biomedical applications. The eco-sustainable biomaterial ZnO NPs has been synthesized with a simple in situ precipitation method, in which the potent antifungal drug FCZ was implemented into the system to improve its strength, and the system was further modified by employing CS biopolymer. CS is an amorphous, translucent organic biopolymer with a structure unit similar to the polysaccharide structure of the extracellular matrix. This may provide mechanical strength to the nanocomposite by creating interfacial bonding between them. Such a novel nanocomposite has been physicochemically characterized using Fourier transform infrared spectroscopy (FTIR), X-ray diffraction (XRD), Ultra violet (UV), Scanning electron microscope (SEM), and particle size distribution (PSD). Additionally, the well diffusion technique was used to evaluate the ZnO-NPs and to develop FCZ-ZnO-CS nanocomposite for antibacterial and antifungal activities against Escherichia coli, Staphylococcus aureus, Candida albicans, and A. niger. The FCZ-ZnO-CS functionalized nanocomposite has excellent antifungal activity against Candida albicans and Aspergillus niger and optimum antibacterial activity against Escherichia coli and Staphylococcus aureus. Cytotoxicity studies demonstrated that the developed nanocomposite material FCZ-ZnO-CS has significant cytotoxicity against the mouse embryonic fibroblast (NIH-3T3) cell line. These results reveal that ZnO-incorporated fluconazole-chitosan (FCZ-ZnO-CS) could be used as an ideal material for candidiasis applications.