This study is designed to extract crystalline cellulose from cotton and reinforcing gelatin film for biomedical applications, especially as a wound dressing material for its exceptional biocompatibility and bio-activity. Moreover, gelatin helps in wound healing and crystalline cellulose as additive can improve its properties. Crystalline cellulose was prepared through hydrolysis and the effects of crystalline cellulose loading on the morphology, mechanical properties, and water sensitivity of the nanocomposite were investigated by means of scanning electron microscopy, tensile strength testing, and water absorption testing. Developed biocomposite film showed homogeneous dispersion of crystalline cellulose within the gelatin matrix and strong interfacial adherence between the matrix and reinforcement. Samples were tested for biocompatibility and in vitro cytotoxicity and found to have excellent biocompatibility without having any cytotoxicity. In vivo wound healing study in an animal model showed 40% increased healing than the model dressed by conventional dressing.