Chitosan (CTS) has been used as a nerve guidance conduit (NGC) material for bridging peripheral nerve defects due to its biocompatible, biodegradable, and non-toxic properties. However, the nerve regeneration effect of chitosan alone is restricted due to its inadequate biological activity. Herein, a composite, bioactive chitosan based nerve conduit, consisting of outer warp-knitted tube scaffold made from medical-grade chitosan fiber, and inner porous cross linked carboxymethyl chitosan (C-CM-CTS) sponge with radial texture was developed. The inner wall of the scaffold was coated with C-CM-CTS solution. CM-CTS provided favorable bioactivities in the composite chitosan-based nerve conduit. An in vitro study of CM-CTS revealed its satisfying biocompatibility with fibroblast and its inhibition of oxidative damage to Schwann cells. As the internal filler of the NGC, the lyophilized sponge of C-CM-CTS showed a longitudinal guidance effect for nerve reconstruction. After 10 mm defect in rat sciatic nerve was bridged with the composite bioactive chitosan-based nerve conduit, the nerve conduit was able to effectively promote axonal regeneration and played a positive role in inducing nerve regeneration and functional recovery. In addition to the functional advantages, which are equal to those of an autograft; the technology for the preparation of this conduit can be put into mass production.