Bleached bagasse pulp was pretreated with dilute alkali and xylanase enzymes before isolation of microfibrillated cellulose using ultra-high friction grinding and high-pressure homogenization. The isolated nanofibers were used with chitosan polymer to prepare chitosan nanocomposites by solution casting at nanofiber loading from 2.5 to 20%. The effect of nanofibers loading on moisture sorption, dry and wet tensile strength, crystallinity, thermal stability, and dynamic mechanical thermal properties was studied using tensile testing, X-ray diffraction (XRD), thermogravimetric analysis (TGA), and dynamic mechanical thermal analysis (DMTA). Nanocomposites with good transparency were obtained at the different nanofibers loadings. Chitosan nanocomposites made using nanofibers isolated from bagasse fibers treated with xylanase or alkali showed higher dry and wet tensile strength than those made using nanofibers isolated from untreated bagasse pulp. DMTA results showed higher storage modulus and indicated higher glass transition temperature for the chitosan nanocomposites than that of neat chitosan. XRD patterns showed that, at low nanofibers loading, addition of bagasse nanofibers to chitosan matrix increased ordering of chitosan chains upon drying the nanocomposites films.