Novel antibacterial nanomaterials have been developed for biomedical applications. The present study involves the preparation and properties of antibacterial nanofibers from chitosan/polyethylene oxide electrospun nanofibers incorporated with silver nanoparticles. Silver nanoparticles were efficiently synthesized in situ after ultra violet (UV) with AgNO3 as precursor and chitosan/polyethylene oxide as reducing agent and protecting agent, respectively. Then the resultant solutions were electrospun into nanofibers. The formation of silver nanoparticles was confirmed with ultraviolet visible (UV-vis) and transmission electron microscopy (TEM), and the electrospun nanofibers were characterized by scanning electron microscopy and energy dispersive X-ray. The resultant fibers exhibited uniform morphology with silver nanoparticles distributed throughout the fiber. Also, the fibers showed certain tensile strength and excellent antibacterial activity against Gram-positive (Staphylococcus aureus) and Gram-negative (Escherichia coli) bacteria. Sustained release of silver nanoparticles from fibers could last for over 72h. The silver-containing chitosan/polyethylene oxide nanofibers showed excellent cytocompatibility.