Effective treatment of skin wounds is essential due to the skin's protective, regulatory, and aesthetic functions. Post-injury infections can significantly impair healing, highlighting the need for advanced biomaterials that combine antimicrobial activity with regenerative potential. In this study, we developed a multifunctional chitosan/gelatin/polyvinyl alcohol (CS/GEL/PVA) nanocomposite containing magnesium oxide (MgO) nanoparticles loaded with quercetin (MgO@QC), aimed at enhancing wound healing and promoting keratinocyte growth factor 1 (KGF1) expression. MgO nanoparticles were synthesized and characterized using DLS, zeta potential, FTIR, XRD, FESEM, and TEM. Quercetin was successfully loaded onto the MgO nanoparticles with a high loading efficiency of 99%, as confirmed by spectroscopic analyses. The resulting nanocomposite demonstrated favorable physicochemical properties, including uniform morphology, excellent swelling behavior (∼79%), optical clarity, and robust structural integrity. Hemolysis assays revealed excellent hemocompatibility, while in vitro cytotoxicity tests confirmed biocompatibility up to 500 µg/mL. Cell proliferation and migration assays (MTT and scratch test) showed dose-dependent enhancement of fibroblast activity, particularly at 1 mg/mL. The nanocomposite also significantly upregulated KGF1 gene expression, suggesting its role in stimulating epithelial regeneration. In vivo studies using a murine excisional wound model demonstrated accelerated wound closure and tissue regeneration in the MgO@QC-treated group, supported by histological evidence of angiogenesis, re-epithelialization, and reduced inflammation. The CS/GEL/PVA/MgO@QC nanocomposite offers a biocompatible and bioactive platform that significantly enhances wound healing. These findings suggest its strong potential for clinical application as an advanced wound dressing for acute and chronic skin injuries.