This study presents a sustainable approach to synthesizing carbon nanoparticles (CNPs) from orange peel waste through a process involving thermal treatment, chemical activation, and ultrasonication, producing spherical CNPs of approximately 70 nm in size. The surface of the CNPs was modified with chitosan, resulting in a chitosan@CNPs composite with enhanced functional properties. X-ray diffraction (XRD) analysis revealed that the CNPs possess a crystalline structure, while the chitosan@CNPs nanocomposite exhibited distinct crystalline peaks attributable to chitosan. SEM–EDX analysis showed a higher carbon content in chitosan@CNPs (68.09%) compared to CNPs (63.33%), indicating successful surface modification. Additionally, UV–Vis spectroscopy demonstrated that chitosan@CNPs had a slightly higher band gap energy (3.92 eV) compared to CNPs (3.86 eV), reflecting altered optical properties. The anti-hemolytic activity of chitosan@CNPs was 74.4% at 20 mg/mL, slightly higher than CNPs at 70.1%, when compared to the standard (ascorbic acid). However, the antioxidant activity of CNPs was higher (89.52%) than that of chitosan@CNPs (59.97%). Cytotoxicity assessments confirmed the biocompatibility of both materials, with minimal cytotoxic effects observed. These findings suggest that orange peel waste-derived CNPs hold potential for applications in drug delivery, biosensing, and environmental remediation.