As functionalized chitosans hold great potential for the development of effective and broad-spectrum antibiotics, representative chitosan derivatives were tested for antimicrobial activity in neutral media: trimethyl chitosan (TMC), carboxy-methyl chitosan (CMC), and chitosan-thioglycolic acid (TGA; medium molecular weight: MMW-TGA; low molecular weight: LMW-TGA). Colony forming assays indicated that LMW-TGA displayed superior antimicrobial activity over the other derivatives tested: a 30 min incubation killed 100% Streptococcus sobrinus (Gram-positive bacteria) and reduced colony counts by 99.99% in Neisseria subflava (Gram-negative bacteria) and 99.97% in Candida albicans (fungi). To elucidate LMW-TGA effects at the cellular level, microscopic studies were performed. Use of fluorescein isothiocyanate (FITC)-labeled chitosan derivates in confocal microscopy showed that LMW-TGA attaches to microbial cell walls, while transmission electron microscopy indicated that this derivative severely affects cell wall integrity and intracellular ultrastructure in all species tested. We therefore propose LMW-TGA as a promising and effective broad-band antimicrobial compound.