We report water-in-oil (W/O) microemulsion synthesis of fluorescently bright and paramagnetically strong bimodal chitosan nanoparticles (BCNPs). The W/O microemulsion system provides a confined environment for producing monodispersed BCNPs. Average particle size as estimated by the Transmission Electron Microscopy was 28 nm. The water to surfactant molar ratio of 22 produced small size fairly monodispersed BCNPs. Fluorescein isothiocyanate (FITC, a fluorescent dye) and Gd-DOTA (a paramagnetic Gd ion chelating agent) were covalently attached to chitosan polymer backbone prior to BCNP synthesis. The purpose of the covalent attachment of fluorescent and paramagnetic labels to chitosan is to prevent leakage of these labels from the BCNPs. The BCNPs were cross-linked with tartaric acid using water-soluble carbodiimide coupling chemistry in order to maintain particulate integrity. Zeta potential value of +27.6 mV confirmed positive surface charge of cross-linked BCNPs. Fluorescence excitation and emission spectra of BCNPs were similar to that of bare FITC spectra, showing characteristic 520 nm emission at the 490 excitation. Paramagnetic gadolinium ion (Gd3+) concentration in the BCNPs was determined by inductively coupled plasma (ICP) emission spectroscopy. The longitudinal (T1) and transverse (T2) proton relaxation times were determined as a function of Gd3+ concentration in the BCNPs at 4.7 Tesla. Proton relaxivity (R1 value) of BCNPs was calculated to be 41.1 mM Gd(-1)s(-1). The reported R1 value of Gd-DOTA chelates is however 5.8 mM Gd(-1)s(-1). High proton relaxivity of BCNPs is attributed to hydrated chitosan environment around Gd chelates which additionally contributed to overall water exchange process. To demonstrate in vitro bioimaging capability, J774 macrophage cells were incubated with BCNPs. Confocal images clearly showed BCNP uptake by J774 cells. Internalization of BCNPs was confirmed by co-labeling J774 cells with a red-emitting membrane dye. BCNP green emission was mostly observed from middle of cells and within the red-emitting membrane boundary.