Development of sustainable, biodegradable alternatives has become more urgent worldwide due to the escalating environmental issue linked to petroleum-based plastics. Chitosan and Poly(butylene succinate) (PBS) are two emerging candidates that have drawn a lot of attention because of their complementary qualities. PBS has good mechanical strength, biodegradability, and processability, while chitosan has antimicrobial activity, biocompatibility, and the capacity to form films. The inherent drawbacks of each substance, such as the brittleness of PBS and the limited solubility of chitosan, limit their potential uses on their own. Recently, bio-based nanoparticles including cellulose, lignin, and starch nanocrystals have been incorporated into these biopolymers to improve them thanks to developments in nanotechnology. These nanoparticles enhance PBS/chitosan composites' tensile strength, thermal stability, and barrier qualities while also enabling adjustable biodegradation behavior appropriate for a range of uses. This paper furnishes a thorough analysis of PBS/chitosan nanocomposites boosted with bio-based nanoparticles, going into their structure–property connections, processing methods, and several multipurpose uses in smart materials, biomedical scaffolds, food packaging, and agriculture. The current situation in India, where regulations centered on sustainability are driving the development and commercialization of biodegradable polymers, is highlighted in particular. Economic and environmental evaluations are also provided, emphasizing difficulties with standardization, recycling, and large-scale adoption. The paper ends with recommendations for future research that center on integrating the circular economy, scalable green processing, hybrid nanoparticle systems, and compatibilization at the molecular level. PBS/chitosan nanocomposites, taken together, offer a promising class of environmentally friendly materials that combine sustainability and performance, providing potential routes to the next generation of biodegradable plastic alternatives.