The present investigation is designed to formulate and evaluate chitosan coated Magnetic nanoparticles (MNPs) containing Amoxicillin trihydrate as a model drug for controlled drug delivery. MNPs were prepared by using chemical co-precipitation method and these uncoated MNPs were further coated by chitosan and Amoxicillin trihydrate. The prepared coated MNPs were then evaluated by various techniques such as FT-IR, TGA and XRD. FTIR spectra depicted that chitosan and Amoxicillin trihydrate (AMT) were successfully coated on to iron oxide MNPs by electrostatic interaction. Thermogravimetric analysis (TGA) of the formulation established that MNPs improved the thermal stability of the drug. XRD studies revealed that the Iron oxide MNPs were having inverse spinal structure. Transmission electron microscopy (TEM) and scanning electron microscopy (SEM) photomicrographs represented that the uncoated MNPs were rhombohedral in shape and had the average diameter of 35-40nm which after coating increased to 40-45nm. The in vitro drug release study showed that MNPs have sustained release profile of drug delivery with burst release of AMT in first 2 hours followed by sustained release. Antimicrobial activity of the formulation was confirmed by agar plate diffusion method and Minimal inhibitory Concentration was assessed by using tube dilution method against suitable microbial strains.