Drug delivery system (DDS) refers to the method of delivering drugs to the targeted sites with minimal risk. One popular strategy of DDS is using nanoparticles as a drug carrier, which are made from biocompatible and degradable polymers. Here, nanoparticles composed of Arthrospira-derived sulfated polysaccharide (AP) and chitosan were developed and expected to possess the capabilities of antiviral, antibacterial, and pH-sensitive properties. The composite nanoparticles, abbreviated as APC, were optimized for stability of morphology and size (~160 nm) in the physiological environment (pH = 7.4). Potent antibacterial (over 2 μg/mL) and antiviral (over 6.596 μg/mL) properties were verified in vitro. The pH-sensitive release behavior and release kinetics of drug-loaded APC nanoparticles were examined for various categories of drugs, including hydrophilic, hydrophobic, and protein drugs, under different pH values of the surroundings. Effects of APC nanoparticles were also evaluated in lung cancer cells and neural stem cells. The use of APC nanoparticles as a drug delivery system maintained the bioactivity of the drug to inhibit the proliferation of lung cancer cells (with ~40% reduction) and to relieve the growth inhibitory effect on neural stem cells. These findings indicate that the pH-sensitive and biocompatible composite nanoparticles of sulfated polysaccharide and chitosan well keep the antiviral and antibacterial properties and may serve as a promising multifunctional drug carrier for further biomedical applications.