Reverse electrodialysis (RED) is one of the most promising membrane-based processes for renewable energy generation from mixing two solutions of different salinity. However, the presence of Mg2+ in natural water has been shown to drastically reduce open circuit voltage (OCV) and output power of RED. To alleviate this challenge, commercial cation exchange membranes (CEM) supplied by Fujifilm Manufacturing Europe B.V. (The Netherlands) were chemically modified by polypyrrole (PPy)/chitosan (CS) composites under controlled Pyrrole (Py) concentration (0.025–1 M) and polymerization time (0–8 h). The modified membranes were physically characterized by FTIR, SEM and EDX along with the determination of key electrochemical properties like ion exchange capacity, ionic conductivity, monovalent selectivity and swelling degree. The monovalent selectivity (Na+ vs Mg2+) of the modified membranes, evaluated based on flux of ions by diffusion dialysis, indicated up to 3-fold improvement compared to pristine membranes inline with the enhanced OCV (up to 20%) during RED test in multi-ion solution. This was obtained without significant change in membrane and interface resistances as depicted by electrochemical impedance spectroscopy. The modified membranes displayed power densities in the range of 0.6–1.5 W/m2MP (MP: membrane pair) with more than 42% improvement compared to pristine membranes during RED test with multi-ion solutions. Although there is a gap for further improvement, these findings highlight a promising use of conducting polymers to design a highly selective and conductive membrane for RED.