Biosynthesis of bacterial cellulose was carried out under ambient conditions by gram negative bacterium Acetobacter xylinum using standard medium and modified media. The yield of cellulose in these media was compared. Bacterial cellulose was characterized using infrared spectroscopy and scanning electron microscopy. Its water holding capacity was assessed and results were compared with that of plant cellulose. Bacterial cellulose and plant cellulose were treated with extracts of novel natural herbs such as bitter gourd (Momordica charantia), tridax daisy (Tridax procumbens) and with chitosan to impart antibacterial activity.