The synthesis, thermal, dielectric and conductivity properties of functionalized chitosan polymer derivatives are evaluated to determine their potential uses as a nontoxic electrolyte/separator for lithium batteries. Deacetylated chitosan (DAC) at 97% is used as a precursor to prepare two derivatives: N-propylsulfonic acid chitosan (SC), chitosan with zwitterionic pendant groups (ZWC). These derivatives increase the polar character of pure chitosan, and significantly improve its solubility. Likewise, they are thermally stable up to 220 C, and their glass transition temperatures (Tg) are located in the region where they decompose, except for SC (Tg = 158 C). The incorporation of the sulfobetaine and zwitterionic pendant groups improves the ionic conductivity by at least 2 orders of magnitude with respect to pure chitosan at 25 C, without the use of plasticizers or further modifications. The salt addition (LiPF6 or LiClO4) to ZWC does not modify the conductivity, whence it is suggested that its increase is due to an electronic modification, such that the energy barriers for conducting the Li+ across the ZWC become decreased (i.e., charge dislocation), rather than a salt dissociation. This experimental finding is confirmed with density functional theory (DFT) calculations conducted with the SC and ZWC structures.