The avian influenza virus (AIV) poses a serious threat to the poultry industry, leading to substantial economic losses and having the potential to cause severe zoonotic diseases worldwide. The development of mucosal vaccines has prompted greater attention due to their ability to mimic the natural infection process and streamline the delivery method. In this study, we evaluated the efficacy and immunomodulatory responses of an intranasal vaccine containing inactive H5N1 virus and bacterial sialidase with mucoadhesive chitosan adjuvant. The results demonstrated that the challenged intranasally vaccinated group exhibited a significantly suppressed mortality rate and viral shedding compared to the group infected with H5N1 AIV. Additionally, elevated mucosal IgA at several days post intranasal vaccination indicated activation of the nasal-associated lymphoid tissue (NALT) and improvement of cell-mediated immune responses. Gene expression analysis of the innate immune system revealed significant downregulation of TLR7 and diminished interferon responses in brain and lung tissues, suggesting restricted viral recognition and replication. In the trachea, challenged birds exhibited selective upregulation of IFN-γ, while the vaccinated group had no substantial activation, indicating that intranasal vaccination modulated local immune responses at the viral entry site. In conclusion, intranasal vaccination reduced tissue damage, suppressed viral shedding, and improved mucosal protection, demonstrating its potential as a candidate strategy to manage H5N1 AIV outbreaks.