Polyethylene nanocomposite incorporated with zinc-montmorillonite intercalates were prepared by melt extrusion route as a cheap and safe alternative to silver based antimicrobial plastics which often present issues of toxicity and incompatibility to human tissues. Although zinc ions/zinc oxide nanoparticles show satisfactory antimicrobial performance and is declared as an essential nutrient element upto a threshold concentration, it remains underutilized in fabrication of antimicrobial polymer nanocomposites. Natural smectite clay montmorillonite (MMT) has been used as a stabilizing surface for adsorption of zinc ions/zinc oxide nanoparticles which were synthesized in-lab using a combination of facile ion exchange and reduction reactions. The zinc-clay hybrids were compounded in polyethylene matrix in presence of a compatibilizer at different concentrations. The micro-morphology of the polyethylene nanocomposite demonstrated a mixture of intercalated and exfoliated structure with absence of agglomerated tactoids. The nanocomposite showed good antibacterial properties against Gram (-) E. coli and Gram (+) S. aureus and excellent antifungal properties against black mold fungi A. niger. In vitro cytocompatibility assays of prepared nanocomposites with human erythrocytes and human dermal fibroblast cell lines indicated complete cytocompatible behavior. The polyethylene nanocomposite are completely safe and affordable with highly potent antimicrobial behavior and therefore can replace neat polyethylene counterparts in biomedical sector with applications such as catheters, tubing, surfaces and medical devices and casings with an aim to decrease nosocomial infections in a microbe rich environment.