Nanomaterials have created massive opening on textile functionalization such as antimicrobial and sun protection activities of fabrics. The focal point of this paper is to impart antimicrobial and UV protection activities of textile substrates using a nanocomposite hybrid material chitosan with α-iron oxide. α-Fe₂O₃ nanoparticles were synthesized by self-assembly method and characterized. The average particle size was found to be 27–30 nm by X-ray diffractogram and atomic force microscopic analyses. The α-Fe₂O₃ nanoparticles were dispersed into the prepared chitosan solution to form the hybrid material. The chitosan-α-Fe₂O₃ nanocomposite thus formed was subjected to characterizations such as X-ray diffractogram, FTIR and SEM with EDX. The chitosan-α-Fe₂O₃ nanocomposite was dip-coated on cotton and silk fabrics and antibacterial activity was checked by zone of inhibition method (AATCC 147) against Staphylococcus aureus and Escherichia coli bacteria and the UV protection activity was analyzed using UV-DRS spectroscopy. Results revealed that the hybrid CH-α-Fe₂O₃ nanocomposite possess improved antibacterial as well as UV absorbing efficiency.