The use of electric field represents a promising strategy to overcome the existing challenges in synthesizing metal nanoparticles. A facile and clean method for the preparation of water-soluble metal nanoparticles with a narrow particle distribution is reported here based on the electric-field-driven phase-inversion procedure. Bioderived chitosan was used to stabilize the metal nanoparticles, and formic acid was employed as both a solvent (for the polymer) and a reductant (for the metal). The electric field has been characterized to modify the hydrogen bonds of the chitosan and promote the stabilization and reduction of metal nanoparticles. Taking silver as an example, the nanoparticles obtained lay in the range of 2–6 nm with a mean size of 3.4 nm. The produced chitosan/Ag nanocomposites can be used in homogeneous (water-soluble) form for catalysis and heterogeneous form (as a solid film) for antibiosis. Exceptional performance in the selective regeneration of cofactor NADH (turnover frequency (TOF) = 582 h–1) and an improved antibacterial performance were attained. Successful preparation of metallic Cu, Au, and Pt nanoparticles (∼1–2 nm) confirms the universality of this method for synthesizing functional nanomaterials with various potential applications.