Our current research work comprised of synthesis of a series of novel chitosan based water dispersible polyurethanes. The synthesis was carried out in three steps, in first step, the NCO end capped PU-prepolymer was formed through the reaction between Polyethylene glycol (PEG) (Mn = 600), Dimethylolpropionic acid (DMPA) and Isophorone diisocyanate (IPDI). In second step, the neutralization step was carried out by using Triethylamine (TEA) which resulted the formation of neutralized NCO terminated PU-prepolymer, after that the last step chain extension was performed by the addition of chitosan and followed the formation of dispersion by adding calculated amount of water. The proposed structure of CS-WDPUs was confirmed by using FTIR technique. The antimicrobial activities of the plain weave poly-cotton printed and dyed textile swatches after application of CS-WDPUs were also evaluated. The results showed that the chitosan incorporation in to PU backbone has markedly enhanced the antibacterial activity of WDPUs. These synthesized CS-WDPUs are eco-friendly antimicrobial finishes (using natural bioactive agents such as chitosan) with potential applications on polyester/cotton textiles.