In this study, we present a simple synthetic route for the preparation of narrowly distributed silver nanoparticles by using a phenolic hydroxyl modified chitosan as both reducing and capping agent. The effects of factors such as temperature and the concentration of both chitosan derivative and AgNO₃ were systematically investigated and optimized. It was shown that narrowly distributed silver nanoparticles with an average diameter of 4–5 nm were successfully prepared under the optimal conditions in just few minutes. The structure, morphology and physicochemical properties of the prepared silver nanoparticles were characterized in detail by a series of techniques. The roles of phenolic hydroxyl groups linked by Schiff base in the reduction and stabilization of silver nanoparticles were studied by comparison with a series of chitosan derivatives and the possible mechanism was proposed. These chitosan derivative stabilized silver nanoparticles, combining the unique properties of silver and chitosan, exhibited broad spectrum and excellent antimicrobial performance against different categories of both bacteria and plant fungi.