Chitosan powder is synthesized by a deasetylation process of chitin, obtained from processing of dried shrimp shell powder. Subsequently, chitosan (CS) membranes filled by montmorillonite (MMT) particles and phosphotungstic acid are prepared, and characterized by FT-IR and SEM. The morphology, obtained by SEM for the composite membrane, showed that MMT filler is successfully incorporated and relatively well dispersed in the chitosan polymer matrix. Water and methanol uptake for the CS/MMT composite membranes decrease with increasing MMT loadings, but IEC value increases. In all prepared CS/ MMT composite membranes, the CS membrane filled by 5 wt% MMT particles exhibits the best proton conductivity, while that with 10 wt% MMT loading exhibits the lowest methanol permeability; these values are 2.67 mS·cm−1 and 3.40 × 10−7 cm2·s−1, respectively. The best membrane selectivity is shown in the CS/MMT10 composite membrane; this shows that 10 wt% filled MMT is the optimum loading to improve the performance of the chitosan composite membrane. These characteristics make the developed chitosan composite membranes a promising electrolyte for direct methanol fuel cell (DMFC) application.