The waste biomass of Aspergillus niger, following citric acid production, was used as a source for fungal chitosan extraction. The produced chitosan was characterized with deacetylation degree of 89.6%, a molecular weight of 25,000 dalton, 97% solubility in 1% acetic acid solution and comparable FT-IR spectra to standard shrimp chitosan. Fungal chitosan was applied as a cotton fabric finishing agent using pad-dry-cure method. The topographical structure of chitosan-treated fabrics (CTF) was much improved compared with control fabrics. CTF, after durability tests, exhibited a powerful antimicrobial activity against both E. coli and Candida albicans, the captured micrographs for E. coli cells contacted with CTF showed a complete lysis of cell walls with the prolonging contact time. The produced antimicrobial CTF could be proposed as a suitable material for many medical and hygienic applications.