In this study, a novel fibre-reactive nanoparticle was synthesised in three steps. First a water-soluble chitosan derivative, N-[(2-hydroxy-3-trimethylammonium)propyl] chitosan chloride (short for HTCC), was prepared by reacting chitosan with 2,3-epoxypropyltrimethylammonium chloride. Second the HTCC was further modified by reacting it with N-(hydroxymethyl)- acrylamide to prepare a fibre-reactive chitosan derivative, O-methyl acrylamide quaternary ammonium salt of chitosan (short for NMA-HTCC), which can form covalent bonds with cellulose fibre under alkaline conditions. Thirdly NMA-HTCC nanoparticles were prepared by the ionotropic gelation reaction method. The particle size and TEM researches indicated that the globular NMA-HTCC nanoparticle with a size distribution of 15 - 50 nm was successfully prepared and presented good dispersity and stability. Then the NMA-HTCC nanoparticle was used for the textile finishing of cotton fabric. The modified cotton fabric demonstrated excellent durable wrinkle-resistance and antibacterial activity against Staphylococcus aureus and Escherichia coli, even after 50 repeated launderings. Moreover the shrinkage-resistance of the modified cotton fabric was distinctly improved, and the contact angle was slightly larger, while the whiteness and mechanical properties had not changed in an obvious way.