The synthesis of chitosan-silver scaffolds (CS-Ag) by a novel method of melt-down neutralization, followed by solvent curing and freeze drying techniques is reported. The slow and steady melting of the frozen chitosan allows uniform neutralization. The scaffolds were characterized by X-ray diffractometry (XRD), Fourier-transform infrared spectroscopy (FTIR), thermogravimetric analysis (TGA), and scanning electron microscopy (SEM). Enzymatic degradation of the scaffold was studied using lysozyme. Silver release studies showed that there was a slow and sustained release of silver and these CS-Ag scaffolds exhibited antibacterial properties against representative Gram-positive and Gram-negative bacteria. Biocompatibility studies of the CS-Ag scaffolds on keratinocytes (HaCaT) showed growth and proliferation without exhibiting any toxicity. These CS-Ag scaffolds are proposed as promising candidates for tissue engineering applications.