Chitosan can be best utilized as safe antimicrobial agent for textiles but there is always a limitation of its durability. In the current work, chitosan has been extracted from shrimp shells and then used as antimicrobial exhaust finishing agent for grafted rayon fabric. The acrylic acid grafted rayon fabric as backbone further treated with chitosan based exhaust finishing agent to get chitosan bound grafted rayon fabric. The chitosan bound grafted rayon fabric has enhanced antimicrobial properties, tear resistance, permeability, flexibility, moisture retention, biocompatibility, non-toxicity and wound dressing ability and remains durable even after multiple wash of the fabric or even after absorbing fluid, liquid and wound exudates