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Chitosan has received much attention as a functional biopolymer for diverse applications, especially in pharmaceutics and medicine. Our recent efforts focused on the chemical and biological modification of chitosan in order to increase its solubility in aqueous solutions and absorbability in the in vivo system, thus for a better use of chitosan. This review summarizes chitosan modification and its pharmaceutical/biomedical applications based on our achievements as well as the domestic and overseas developments: (1) enzymatic preparation of low molecular weight chitosans/chitooligosaccharides with their hypocholesterolemic and immuno-modulating effects; (2) the effects of chitin, chitosan and their derivatives on blood hemostasis; and (3) synthesis of a non-toxic ion ligand—D-Glucosaminic acid from Oxidation of D-Glucosamine for cancer and diabetes therapy.