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Biopolymer-based metal nanocomposites are gaining importance due to their safety, stability, and ease of synthesis. Chitosan and silver-based nanoparticles have been found to be effective as anti-fungal agents. In this study, we tested the fungicidal effect of green synthesized chitosan silver nanocomposites (CS-AgNPs) against the chilli anthracnose pathogen Colletotrichum truncatum (syn. C. capsici). The nanoparticles were synthesized at 90 ± 1 °C under alkaline condition. Chitosan was used as a reducing and stabilizing agent in the synthesis. The formation of nanoparticles (NPs) was indicated by a change in the colour of the solution to yellow. UV-Visible spectroscopy of the synthesized nanoparticles showed a surface plasmon resonance peak between 406 and 420 nm. The synthesized silver nanoparticles were small, and the average particle size distribution was 4 nm, as characterized by TEM and FESEM. The Zeta potential measurement of the synthesized nanoparticles ranged from + 41.9 mV and + 50.5 mV. The nanoparticles were further characterized by XRD and FTIR analysis. The nanocomposites showed antifungal activity against C. truncatum in an in vitro conidial germination assay even at a concentration of 0.0005%. In vivo assay using detached chilli fruit (Capsicum annuum) showed that the nanocomposites significantly inhibited anthracnose in both preventive and curative measures. Even when applied at a concentration of 0.0625%, the nanocomposites exhibited growth-promoting activity with chilli seeds. Thus, the synthesized nanocomposites have a dual benefit of growth promotion as well as an effective antifungal agent in preventing postharvest anthracnose disease in chilli.