The research on biopolymers and its derivatives has received much attention from the researchers toward preparing a novel material. The biopolymers and its derivatives have broad applications due to its biodegradability, nontoxicity and biocompatibility. The present study aimed to develop and characterizes a unique chitosan Schiff base by coupling chitosan with isatin under acidic conditions to form isatin/chitosan Schiff base. The changing in chitosan chemical structure was proved by FT-IR, electronic spectra. The physico-chemical study shows a decrease of samples water uptake and solubility in aqueous acidic solution by increased isatin content as a result of an increase in hydrophobicity character of chitosan by modification. Antibacterial activity was tested against four different bacterial strains one gram-positive: (Staphylococcus aureus) and three gram negative (Pseudomonas aeruginosa, Salmonella and Proteus vulgaris). The results showed increases in the antibacterial activity of substituted chitosan against both gram-negative and gram-positive bacteria by the rise in isatin content.