This study formulated and characterized metformin-loaded chitosan nanoparticles (NPs) using the ionic gelation technique and evaluated the drug release kinetics. Characterization confirmed successful drug encapsulation, with Fourier-transform infrared spectroscopy (FTIR) indicating compatibility, and X-ray diffraction (XRD) showing attenuation of characteristic metformin reflections consistent with reduced crystalline contribution after encapsulation. Particle sizes ranged from 74.28 to 86.82 nm. The NPs exhibited stable zeta potentials (+42.38 to +49.06 mV) and high entrapment efficiencies (68.42–81.26%). In vitro drug release studies at pH 7.4 and pH 2.0 demonstrated an initial burst release, followed by sustained release over 24 h. The cumulative drug release ranged from 81.92% to 97.72% at pH 7.4 and 89.4% to 98.1% at pH 2.0, with a faster release at pH 2.0. Drug release kinetics followed first-order for batch MN1, while batches MN2 and MN3 best fitted into the Higuchi model, indicating diffusion-controlled release through the chitosan polymeric network. The formulated metformin nanoparticles demonstrated significant potent dose-related and time-dependent cytotoxic effect against ovarian cancer cell lines and in vivo blood glucose lowering effect compared to the conventional dosage forms and control (p < 0.05). These findings highlight the potential of metformin-loaded chitosan NPs for sustained drug delivery, which may enhance patient compliance by reducing dosing frequency. Future studies should further explore their clinical applications.